What is a credit or FICO® score?
Your credit score or FICO score as it is commonly called is a number – arguably the single most influential number in your life and it was designed to convey to lenders the kind of financial risk they would be taking by having you as a customer. Your score is generated by credit analyzing software that takes into account a number of different criteria. For example, do you pay your bills on time? How much debt do you have? How long have you had your accounts? Have you ever defaulted on loan agreements in the past? The process is complicated, however it does provide the lender a way to determine whether lending you money right now is really a smart move and if so, at what cost? The chart below will help you to have a better understanding of how your score is determined.
What's in your FICO® score?
FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.
These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.
What is a good FICO® score?
Excellent = 800 and higher
With scores in this range your credit or loan applications should alwaysbe approved. In addition you should receive the lowest possible interest rates
Very Good = 700-799
A great range to be in. You most likely will be approved for any type of credit or loan and you should be able to take advantage of good interest rates.
Good = 680-699
With scores in this range you should typically be able to get approved but your interest rate will not be at the lowest rate, however they will still be in a reasonable range.
Fair = 620-679
Depending on the type of loan and your credit history you may find the rates you are quoted are not the best therefore costing you extra money in the long run. If you are approved, certain restrictions will apply to the loan’s terms.
With scores in this range the chances of approval are low however that does not mean you won’t get approved. It does however mean that if you are approved the terms and interest rates will not be pretty. You will end up paying a whole lot more over a longer period of time.
Very poor = 500-579
If you are able to get a loan your terms and interest rates will be through the roof costing you a ton of money in the long run. You need help, contact us now and let us assist you in improving your credit so that you may qualify for an acceptable loan.
Bad = 499 and lower
You need serious professional help with your credit situation. If you do not get your situation under control things will only get worse. Contact us and let us assist you in getting your credit back on track.