When you start applying for credit, you will have to find out what the FICO score range is all about and the impact it has on your chances of getting a credit card or a loan. FICO score range is from 300 to 850. This is the score that is assessed by the creditors before they lend to you. It is important for you to know your credit score as it will allow you to gauge what the creditors are seeking when reviewing your loan application.
FICO score range is a three digit credit rating that gives an estimate of a person’s financial credit worthiness as it is calculated by a model of statistics. FICO score range will try and quantify the possibility of a person taking the credit to fail while repaying a loan over a specific period of time.
What is a FICO Score Range based on?
FICO score range is a method of calculating a credit score that was developed in 1956 by the Fair Isaac Corporation. It uses advanced mathematical and statistical analysis process to help lending institutions make calculated decisions while extending credit. A FICO score range is a gauge of how healthy your credit standing is in the market. When you apply for a credit card, a car loan or a personal loan, you will have to face creditors who would like to check your credit risk level.
The FICO score range is generally based on the information that is on your credit report. Banks and credit card companies use these credit scores to manage the risk that is posed by lending money to you. The credit scores help in determining who qualifies for a loan, assigning of interest rates and credit limits.
How do you assess a Score on the FICO Score Range?
When you get a score of 750 or higher, it is considered a good score on the FICO score range. Each lending institution approaches a credit score with its own ideas about a qualifying score for the best possible rates. When your credit score goes below 700, you are charged slightly higher interest rates on a mortgage. An average score is 680 which falls a little below a good FICO score range. A FICO score range of 650 to 700 may just about give you reasonable rates on a mortgage and most people in this average FICO score range may be able to qualify for the credit cards or the loans they require.
A FICO score range under 600 is a poor score and it will be very difficult to get a loan approved with this kind of a score. The interest rates will be quite high even if the loan is approved. With a poor credit score on a FICO score range, credit card companies will levy high interest rates and fix low spending limits.
How is a FICO Score Range helpful to Creditors?
Creditors can concentrate on information that is related to credit risk rather than their own personal biases. Gender, religion or marital status does not mean anything for FICO scores. If you have a poor credit performance, FICO scores will not let that become a handicap for you. They will allow recent good payment patterns to pick your scores up on your credit report.
A FICO score range will allow creditors an objective estimate of your credit risk factor. Earlier, the credit process was slow and based on bias. Now, you can get your loans processed faster. FICO scores can be given almost instantly to help the credit institutions speed up loan approvals. Many credit decisions can now be made within minutes. A FICO score range will also allow retail stores and other lenders to make instant credit decisions.