What Is A FICO Credit Score Range?

November 7th, 2012 | Author:

[W]hen we think about credit reports and scores, we tend to think of the three major credit bureaus Equifax, Experian, and TransUnion. All three of these companies do collect information about your past and present credit accounts and do issue credit scores upon request. However, if you want to get a major financial deal such as a home mortgage loan then you need to know more about Fair Isaac Corporation. The company created and manages the FICO credit score range that so many people hear about these days.

FICO provides a score based on information from all available credit reports, which some lenders really want to know. For example, some people might have a clean TransUnion report but a litany of credit problems reported on Equifax. Representatives can issue anywhere from 300 to 850 when using a FICO credit score range.

Credit scoring formulas are pretty similar whether your potential lender is using Equifax, Experian, TransUnion, or requesting Fair Isaac’s assistance. The lower your score, the more of a credit risk you present to your prospective lender. The higher the credit score, the better financial risk you pose. Hence, you will be much more likely to receive a loan and get favorable interest rates with a FICO score of 700 or higher.

The Fair Isaac credit scoring formula assigns value to several aspects of your financial history. Thirty-five percent, or about one-third, of your FICO score is directly related to the timeliness of your payments. If you pay bills late or not at all, your credit rating plummets. If you consistently pay your bills on time, you are on the way to having a top tier FICO rating.

Thirty percent, also about one-third, of your Fair Isaac rating depends on your utilization of existing credit accounts. If you have $10,000 of available credit card limits and owe $5,000 or more on your accounts, then your credit utilization is high and decreases your score. Keep all balances to 50 percent or less of your available credit limits; about one-third utilization is even better.

Fifteen percent of your FICO rating can be attributed to the length of your credit history; the longer you have successfully used credit the better off you are financially. Ten percent of your score is determined by whether you have a diverse range of accounts. Lenders want to see you responsibly using credit cards, secured loans, and unsecured loans.

The final 10 percent of your Fair Isaac score is determined by how many recent credit applications you have completed. If you have applied for a lot of credit recently, you look financially desperate and your FICO rating will plummet. Fortunately, the score damage ends after about six to 12 months and the record of your credit applications only remains for two years.

Newest Answers

5 Tips to Repair Your Credit

February 6th, 2017 | Author:
h

[I]f you’ve had credit problems in the past, you may be ready to work to repair your past mistakes. You want to rebuild your credit, but you aren’t sure what to do first. Here are five tips to help you start making a positive impact. 1. Make Sure Everything is Accurate Before you do anything […]

Continue Reading »

Should You Use a Credit Monitoring Service?

February 3rd, 2017 | Author:
h

[I]f you’ve been the victim of compromised data from a large company, you may have received a free year of credit monitoring. Otherwise, you may not give this service much of a thought. It is often seen as a benefit for people who have bad credit or those with a lot of money to lose. […]

Continue Reading »

Reasons Not to Get a Credit Card with Bad Credit

February 1st, 2017 | Author:
h

[Y]ou’ve probably heard that there are credit cards for people with any credit, bad credit, no credit at all. For most, they can qualify for some kind of credit card even if their credit score is below 600. However, just because you can qualify for a credit card, should you get one? You Can’t Handle […]

Continue Reading »

Can You Get a Charge-off Removed from Your Credit Report?

January 30th, 2017 | Author:
h

[I]f you failed to pay a credit account, it probably was charged off and the account sold to a collections agency. You may think this means you are stuck with the negative information for several years. However, there are ways to get a charge-off removed from your credit report. Pay for Delete You can ask […]

Continue Reading »

Good Debt vs. Bad Debt

January 27th, 2017 | Author:
h

[Y]ou’ve probably heard the term “good debt” or “bad debt” and you may even have an idea what it means. However, you may not always recognize the difference between the two. It’s important to understand this distinction, so you can build good credit and become financially stable. What is Good Debt? Most people assume any […]

Continue Reading »

What You Should Know about Balance Transfer Cards

January 25th, 2017 | Author:
h

[I]f you have multiple credit cards that are maxed out or if you have a high interest credit card with a balance, a balance transfer card may seem like the perfect answer to your situation. However, you should understand some basic facts about this card. It Can Save Money Yes, getting a balance transfer credit […]

Continue Reading »

Top Credit Cards for Bad Credit

January 23rd, 2017 | Author:
h

[I]f you have bad credit or less than excellent credit, you may have trouble finding a credit card offer where you can get approved. However, there are credit cards designed for people who have a negative history to help them rebuild their credit. Here are a few to consider. Credit One Bank Credit One Bank […]

Continue Reading »