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What is a FICO Score?
FICO score is a three-digit number assigned to individuals based on their credit position. The score ranges from 300 to 850, where 300 is the worst, and 850 is the highest score. Lenders use FICO scores to determine the credit repaying capability of an individual. A good FICO score indicates that the individual is financially sound and likely to repay loans in the future.
Who Assigns FICO Scores?
FICO scores are created by the Fair Isaac Corporation. There are several other credit rating issuing companies, but FICO scores are used by over 90% of top lenders for their lending decisions. FICO scores have made a mark in the industry for being the most accurate and helping lenders in the credit business.
Good FICO Score Range
A good FICO score starts from 670, and a score of 800 or above is exceptional. A strong FICO score helps a borrower get loans very easily. Lenders such as banks, financial institutions, credit card issuers, and others give special weightage to individuals with strong FICO scores.
Range of Good Credit Scores
- 670 – 739 -> Good -> This means that the individual’s credit score is close to or above the average credit score of all US consumers. Lenders consider this score to be good and are willing to lend.
- 740 – 799 -> Very Good -> This score range is above the average credit score range of US consumers. So, lenders consider this individual to have a very good repaying capability and willingness.
- 800 – 850 -> Exceptional -> This is an exceptional range. This range portrays that an individual is an excellent borrower and lenders will always be willing to lend money.
How to Calculate FICO Scores?
There are five categories based on which the FICO score is assigned. There is weightage given to each category, and an individual’s creditworthiness is valued based on the summation of the score they managed.
The categories are Amounts Owed, Payment History, New Credit, Length of Credit History, and Credit Mix.
How Unique is Your FICO Score?
Your FICO score will reflect your unique circumstances. Say if you are a first time user, then the weightage on timely payment will be less. Like this, there are several unique circumstances for each individual, which will affect the credit score. To know more visit Plaata.com
You may also like: 5 Ways You Can Improve Your Credit Score
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