Today, we welcome a guest post by Emily Kalan on the importance of the Fico Credit Score Range. I personally know how important this score is as it directly influences how much we can buy, what we can buy and the rate we are quoted in case of a credit loan. Enjoy!
Your credit score can affect most of your big financial decisions. Borrowing, applying for mortgages, credit cards and any type of credit can be difficult with the weight of a bad credit history on your shoulders.
Almost everyone knows that their credit score consists of three numbers, but not everyone knows much beyond that.
Over 90% of lenders will use your FICO credit score to influence their decision on whether to accept a loan application or the cost of your interest rates.
Whether you’re trying to improve your credit score or just want to know more about how it all works, then go ahead and read this in-depth article on the FICO Score Range .
You never know when a big financial commitment is going to come up. Every year, millions of Americans need to figure out how they are going to pay for home repairs, medical emergencies, weddings, new vehicles and other expenses.
For many, the best option is to take out a loan or get a credit card. However, a low credit score can negatively affect your chances of being accepted for credit of any kind.
A bad credit history can also lead to exorbitant interest rates when you are applying for credit, which can greatly increase your financial stress. Years of high interest rates will only make your financial situation worse – while attractive interest rates can make your life easier.
With a near-perfect credit score, both applying for and repaying credit will be much easier tasks, and you’ll certainly save money in the long run.
Not everyone knows who can see your credit score – but the following and others have access to your credit information.
- Banks
- employers
- Creditors and potential creditors
- collections
- Service providers (cell phone, utilities)
- lords of the earth
- Insurers
- government agencies
Just like these agencies, any other person, agency or company will be able to view your credit reports with a court order. Don’t worry, these aren’t the easiest to get – nor can anyone see your credit history.
What is a FICO Score?
Your FICO score consists of three digits and is calculated using information from your credit reports.
It’s essentially a numerical reflection of your credit reports, measuring how much credit you’ve had, how much is being used, how long you’ve had credit — and whether you’re getting paid on time.
FICO stands for Fair Isaac Corporation, which was created 30 years ago to create universal transparency between creditor and consumer. It allows the lender to view the credit quality in a fair way. This industry standard system has made borrowing easier for all parties involved and is based solely on finance.
What do the scores mean?
Therefore, we have established that FICO credit scores are triple-digit and can influence lenders’ decisions regarding applications and interest rates.
But there’s more to a credit score than that – the higher the score, the better. The highest credit score you can have is 850, but there’s more to the ranges.
Almost perfect: 800 – 850
With a credit score between 800 and 850, you should have no problem applying for loans. Interest rates will usually be very generous depending on your lender. This is the top credit score level.
Big credit: 740 – 799
While not top notch, the credit score in this area is still well above the US average. Getting a loan with a decent APR should be pretty easy with an interest rate of 740 or higher.
Good credit: 670 – 739
The average American’s credit score is 695, which is somewhere in the middle of that range. Anything in that range is good – it means you don’t have anything too bad on your credit reports.
Decent Credit: 580 – 669
If your credit score is between 580 and 669, you likely had some late payments or negative items on your credit report. You should still be able to acquire credit; although the interest rates offered may be higher than you prefer.
Not the best: 300 – 579
Any value below 579 will have a negative impact on your future finances. That means you have a fair amount of negative items on your credit reports – and it might be worth contacting a credit repair agency.
Potential lenders are generally put off by a credit score in this range, as this suggests you are a ‘risk taker’. If you manage to secure a loan, interest rates will most likely be high.
