Credit Score Range: Learn Some Tips About Your FICO
Creditors will use credit scoring range to determine how much of a risk proposition you
are in terms of paying off debts. In other words, creditors would like to know how likely are you to repay the
money they lend to you. Credit scores can also influence how much you pay for a loan. It's common for lenders to
establish a "base price" and then reduce the points (a point is equal to 1% of the loan amount) on a loan if your
credit score is above a certain level.
Credit score range is used to assign grades, scoring points that are made
to qualify your results as high, average and low. It will give objective viewpoint to the creditworthiness of a
person and thus helps the lender in making effective decisions.
Your credit score, which is also known as FICO scores, can range from 300 to 850. 300 is
the lowest, 850 the highest, the median score is 723. Individuals with higher FICO scores are considered to be less
risky by lenders. Usually, for those with FICO score ranges from 700 to 850 are considered to be safe by creditors.
Anyone with FICO score ranges from 300 to 580 is called a high risk borrower to a creditor, which means your credit
is not good.
Generally, someone with higher credit scores would typically get a much favorable lower
interest rates compared to someone with a lower score, will likely mean higher interest rates. Typically your
credit score range will go down for few months after you have opened up a new line of credit or
obtained some type of loan financing from creditors. The majority percentage of your score going down it comes from
FICO scores offers an excellent guide to future risk based solely on credit report data.
The FICO score is derived from a formula that was created in the 1950s by Fair Isaac and Company as a way to help
lenders to more accurately and more consistently measure the credit risk associated with borrowers. FICO scores are
supposed to be statistical predictors - but won't divulge the formula. FICO scores are about behavior, not just
debt to income numbers. Having no debt and never using any type of credit will results in a very low FICO score
because you become a wild card.
Increasingly, credit scores are now being used for other purposes, other than determining
whether you will default on a loan or make late payments. For example, some insurance companies are using low
credit scores as indicators to identify individuals they believe are more likely to make claims against their
To get your credit score is not free. Credit report and
scores are usually purchased by lenders in order to evaluate your FICO scores from the three
national credit bureaus: Equifax, Experian and TransUnion. They are available to lenders and merchants on a
When you request for your free annual credit report at AnnualCreditReport.com, they
will offer you to calculate your credit score for a fee of $6.95. A score from one credit bureau will cost
approximately $14.95; all three are about $44.85.
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