All your life, you are told how scores play an important role in your life. From school to being in college, your scores did help you in taking better education. But, there is one score that gives you better financial assistance if maintained well. This three-digit score is basically your credit batting average — and like in baseball, the higher the number, the better. So, what is a good fico score number?
You must have come across this when you plan on taking any financial assistance like a car loan, auto loan, home loan, or something else. The lender looks into this three-digit number before they give you the loan. A good FICO score can help you get support on credit cards and some essential loans.
Let me help you understand what a good or bad fico score is. The more you know about raising your FICO score, the better possibility you have of building a larger one. It also provides you with a greater chance of getting the loan you want. So, you should know every aspect of creating a good FICO score and get the best financial assistance for yourself.
What is a FICO score?
Somehow we all know it is a three-digit number that determines how you have handled debt. It also determines if your credit history is good or bad. Let me tell you something more. A fico score is a credit score created by the Fair Isaac Corporation (Fico). Every lender will look into the borrower’s scores with FICO. A lender will also look into other details on borrowers like credit reports to evaluate credit risk and determine whether to extend credit.
FICO scores- introduced more than 25 years ago, in 1995, and the most widely used credit score brands. Majorly 90% of the lenders prefer using FICO to check your report. The borrower applies the proprietary formula to gauge your creditworthiness. Did you know the FICO model used by three credit reporting bureaus: TransUnion, Equifax, and Experian.
Though there are many other models apart from FICO, the FICO score has become the synonyms of credit score. Besides your general FICO score, you also have industry-specific FICO scores-industries like credit cards, auto lending, and mortgage lending – that portion of the loan you take.
So, if you are wondering, what is a fico score range? The score generally ranges from 300 to 850, and if your score is 720 or above. It is considered an excellent score, and the chances of you getting the financial assistance get higher.
What is a good or bad fico score?
From the above information now you know how important your FICO score is when you need financial assistance. So, what is a good fico score number?
However, consumers with excellent FICO scores have their advantages, to get the best rates when they borrow, and the best discounts on insurance. If your FICO score is 800, it means you have an extraordinary score, something around 650 is considered safe. Going further below that from 500 to 400 is mediocre to dire. And with these credit scores, you are going to find it hard to get any positive outcomes.
Your financial assistance is at stake if your FICO score is not up to the mark. You will have other respective success in life but, with bad scores, you could still find yourself helpless to get approved for an auto loan or a mortgage. A good FICO score opens doors for securing requisite loans. Thus you should know how essential it is to maintain your FICO score.
FICO Score ranges
- 350-579: Very Poor Credit
- 580-669: Fair Credit
- 670-739: Good Credit
- 740-799: Very Good Credit
- 800-850: Exceptional Credit
How to improve your FICO scores?
Payment history (35%)
The first step to improve your credit score is to improve your Payment history, 35% of your payment history matters in your fico score. Regularly pay all of your bills — credit cards, phone, installments, everything on time. Nothing will bolster your FICO score more than those timely payments.
Amount of credit used (30%)
So, what is your credit limit and how much have you used it? Is something that matters 30% in your FICO score, the lesser, the better it is. You should hold your balance below 30% of your total credit line. The less is more here, so even if you can keep it below 30%, it is really going to give you a good FICO score.
- It offers you free credit score updates, monitoring services, and personalized advice on how to build your score. It is considered one of the most popular “free credit score” sites on the Internet.
- Credit Karma has various options for credit cards – Balance transfer credit cards, cashback credit cards, 0%, and low-interest credit cards, Rewards credit card, Travel credit card, Hotel credit cards
- Your eligibility reviewed through your credit profile
- Credit Karma helps you to make better financial decisions- by breaking down your credit information and analyzing the information
Length of credit history (15%)
The length of your credit history matters, the time is on your side. The more your credit card companies see you handle credit, the better it is. One of the hacks to show good credit history is to keep your old credit card accounts open with minimum use to present longer credit history. The length is estimated by how long you’ve had your oldest open account, and generally, longer credit history is more beneficial to get a good FICO score.
However, this does not mean short credit history is devastating, but the longer credit history gives a benefit of trustworthiness.
Credit mix (10%)
The credit companies will see how recently your credit card account opened. Also, if it is too recent, some companies might see it as a risk. Also, if too many such accounts are found it can affect your FICO score. Usually, credit companies prefer to see a mix of credit, such as car and student loans, in addition to credit card use. A credit variety suggests that you know how to use credit responsibly.
New credit applications (10%)
The company checks your credit report and too many credit applications in a short time will pull down your FICO score badly. Though there is no hard rule here, you should try to apply for a new credit line no more than once every six months.
Maintain your FICO score now!
Every company providing you with any financial help or their services will check your credit scores. Maintaining good scores has its benefits for you, so go ahead build a good credit score. Adapting good credit habits can help you maintain your FICO score.
Sometimes not carrying your credit card balances month to month, and not opening multiple accounts can help you reach your FICO score goals of 850.
However, there is always an option to live a debt-free life. So, you do not have to worry about your scores. But some situations make it a necessity for you to apply for financial assistance.
Subscribe to our financial blogs to learn from the best financial assistance.