The range for FICO credit score is in between 300 – 850 with the scoring being divided into many different levels. Credit score that is 800 or higher is an excellent FICO and it indicates that you always promptly pay your bills. Only 1% of borrowers have excellent credit score which allows them to get a fast approval and the best interest rate to any loan that they apply. Credit score range in between 740-799 is a very good FICO score that will also gives you the advantage of fast loan approval with the lowest interest rate.
A credit score in between 670 – 739 is a good credit score range that can fetch you a low interest rate for a loan. An average credit score is in between 580 – 669. Many lenders extend loans to borrowers with average credit score at a higher interest rate. Credit score that is lower than 580 is considered a poor credit rating which means that it will be hard to get approved for a loan or credit card. Borrowers with poor credit score should improve their credit scores prior to applying a loan otherwise the interest rate will be very high.
FICO score is originally invented by Fair Isaac Corporation and 90% of lenders use FICO score to determine a lending decision. The credit score is calculated based on several factors such as payment history, how much you owe on your existing debts, how much credit history you have, and the types of loans you have. The credit score is not the only factor that lender looks at when approving the loan.
Each lender has its own method of calculating the risk of the borrowers when coming to deciding whether to approve a loan. There are many other factors that the lender will take into account including how long you are being employed, annual income, other debts that you have, and alimony. Low credit score is not always caused by negligence in making prompt repayment to the lender. If you have very little or no credit history at all, your credit score will be low.
You can request for a free FICO score credit report from the 3 local credit bureaus including Equifax, TransUnion and Experian. The FICO score report you get from each credit bureau may be different as it depends on the data that is submitted to them. You should only apply a loan or credit card from a lender that submit your payment history to at least one credit bureau. If the information on your credit report changes, there will be changes on your credit score as well. You should regularly review your credit report to make sure it has absolutely no mistake. You can dispute any error record on the credit report to get a raise in your credit score.