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FICO scores are the credit scores used by the majority of lenders to assess your credit risk. A good FICO score is required for a variety of loans and credit and qualifying for lower interest rates and insurance premiums. Several factors determine a good FICO score. Therefore, it is beneficial to understand how FICO calculates your score and what you can do to keep it within the ideal range.
A Good FICO Score Is Measurable
Many lenders consider your FICO score when evaluating your credit application. There are two scoring models, which have ranging scores of 300 to 850, and of 250 to 900. Unfortunately, when applying for credit, you don’t always know which model, version or range is being used. According to one of our major credit bureaus, Experian, there are at least 16 versions.*
The following are the FICO credit score ranges:
Poor scores range from 300 to 579.
580 – 669 (Fair)
670 – 739 is a good score.
740 – 799 Very Good
Excellent: 800 – 850
The other scoring approach follows a similar pattern, although there is more leeway on either end of the scale.
FICO score ranges for various industries:
Poor (250 – 579 points)
580 – 669 (Fair)
670 – 739 is a good score.
740 – 799 Very Good
Excellent: 800 – 900
What Is The FICO Score Range That Is Ideal?
Obviously, the higher your FICO score, the better. However, there are no guarantees. Despite the score, every lender has their own set of rules, guidelines and focal points within a credit report. Some lenders, for example, may consider other aspects when determining an applicant’s eligibility, such as their debt-to-income (DTI) ratio.
Even if a person has a good credit score, a loan may be rejected in specific instances determined by the lender themselves.
How does FICO calculate your credit score?
Understanding how FICO calculates your credit score will help you understand how to improve or maintain a good score. FICO considers five key factors to calculate a credit score, each of which has a different weighting:
35% payment history.
30% debt
15% credit history
10% credit blend
10% new credit
With this in mind, use this new understanding to your benefit, and never have to live with bad credit again!
For more information, or to sign up for our classes with more information, you can reach us directly at info@dhfinancialsolutions.com! We’re always here to help!
Reference:
https://www.experian.com/blogs/ask-experian/fico-score-versions/