What Is A FICO Score ?
So, let us take a look at what a FICO score is. A FICO score is a number calculated by another group of numbers, pulled from a bunch of other numbers, which probably originated from numbers of long ago. No, that is not it. A FICO is simply a score that determines how well you are able to go about buying things in life. The score shows lenders if you are a liability or not. There is usually a number, say 650, where the credit score is considered fair, but good enough to get most things. Though, your interest rate will be higher than say, if you had a good score. Credit Score Range: Here is a list of credit scores from highest down to the lowest. The numbers in blue are considered really good. The black numbers are good to fair, and the red numbers are low: ● 850 - Perfect ● 750 - Excellent ● 700 - Good ● 650 - Fair ● 550 - Poor ● 450 - Poor ● 300 - Lowest As you can imagine, you will get the best rates with anything over a 750. Anything down to a 700 will still have a good rate. Anything down to 650 will get you a decent rate. Anything below that, you will be lucky to get approved and if you do the rates will be very high. How did you come up with that FICO Scorer? FICO scores are determined by a group of items. How all of these items play off of one another calculates what type of credit score you will or do have. Each of these particulars are listed below. Each one has a percentage weighted into it. So, let’s take a look at each item and the percentage that goes with it: ● Did you pay on time? Whether you make those payments on time or not determines 35% ● What do you owe on your debt? How much you owe determines 30% ● How old is your credit history? Your credit history length determines 15% ● Did you try to get a new card recently? Whether you applied for any new credit recently determines 10% ● What type of credit accounts do you have? All the credit you have grouped together determines 10% Now that we see what goes into the making of a FICO score, the scores that come from those items makes a little more sense. Most do not realize the depth at which credit scores are calculated. A lot can be learned from each item that goes into determining whether or not you, or anyone else can buy that house of your dreams or new car. Since you know everything that goes into how a score is calculated, pay close attention to every transaction made today and in the future. You can, and should look into your past finances to check if anything is incorrect. That in and of itself will raise your score if a discrepancy is found. Regardless of whether or not you discover a mistake from your past, you should look into possibly taking a class to get a more in-depth look at how credit works