Today an individual’s ability to get a car loan, a decent rate on credit cards or a mortgage loan is controlled by merely a simple three digit number. This number is known as the FICO credit score which was created by the ‘The Fair Isaac Company’. A lot of people are not able to understand this but even their ability to get a job, car insurance and home insurance are all affected by credit scores. Our site is dedicated to bring you the most anticipated topics about credit scores such as getting a free credit score, what is a good credit score, what are the limits of the credit score range, and many more. Just check the sidebar for the relevant topics or read on to get an overall idea of credit scores and how they work.
In order to help businesses make smarter decisions by providing data, The Fair Isaac Company was founded in 1956. In 1995 Fannie Mae and Freddie Mac recommended lenders that they should utilize the FICO score when qualifying mortgage loan applicants and this gave the FICO score an integral credibility boost. During this time all people were told that their FICO score was not good enough and they practically had no clue why their loan was disapproved. It was not until recently that the major categories used for the calculation of credit score were willingly shared by the Fair Isaac Company. Nonetheless the secret and exact formula of calculating credit scores is still closely guarded. In early 2000, in response to public outcry over this secrecy some of the FICO guidelines were published by Internet lenders. This was the time that a law was made by the Congress that enabled people to have access to their scores.
These days over 65% of lenders who want to ensure that they will be getting back the money they lend, now use the FICO credit scores. Lenders now have the ability to raise a person’s loan rates or even deny their credit if they have any doubts that the borrower might pay late or default on the loan.
Since every credit institution today bases their decisions to grant loans, credit card approvals or other forms of financial assistance, upon credit scores therefore they are very important for them. To determine the degree of how good a debtor a person is all they need to do is check a credit score range. People are considered to be trustworthy debtors if they have a high credit score while they are considered as unreliable debtors if their credit score is on a low level.
A lot of people are still not aware what a good credit score range is and in fact seem to be baffled about it. The basic of good credit scores is rather simple. A person’s credit score should at least be around 650 to be eligible for a credit card or a loan with reasonable terms and conditions. This is in fact just a start and not really the most ideal credit score. A great credit score should in fact be above 700 and this is what you should aim for.
Here we have a list of all possible credit scores and their implications:
- 800 to 850 or higher – superb
- 720-799 – excellent
- 680-719 – great
- 620-679 – good
- 580-619 – below average
Anything below 579 would have negative remarks on their credit report and those below 500 will not be able to apply for any type of credit application.
The internet has become a major source of information related to credit scores and about achieving a good credit score. Once you begin understanding it, it can get a bit confusing as well. As hard as it might seem a person can still easily achieve a good credit score by following the right direction.
One thing a person should always pay attention towards is any sort of errors whenever they get a copy of their credit report. A huge and serious amount of data is dealt with by the services that are assessing credit score. Making mistakes is quite a possibility for them. A lot of people do not bother going through the effort of checking for errors in their credit report and this is a big mistake that they make. This error should in fact be avoided.
The good thing about getting credit score is that there are just a few critical elements that people need to be aware about and they are then good to go.