A FICO score is a number assigned to you that rates the risk that lenders take when lending you money. A high score means you have the best credit and pay your bills on time, while a low score indicates to banks that you are a risky choice to extend a loan to.
What influences your score?
Whether you have paid your bills on time.
How long you have had credit for (ten years or ten months).
How much you have spent on your credit cards versus the available limit.
Whether you have had bad credit experiences such as foreclosures, repossessions, accounts that have gone into collections, etc.
Credit Score range:
FICO scores range from 300 to 850.
720 or above is a great score, and you should be able to get the best interest rates on loans possible.
620-719 means you have a good score with little risk of default, and you should get good interest rates on loans.
501 – 619 means you have a lower score, and while you may still be able to get a loan, you will pay higher interest rates than those with scores of 620 or above.
500 or below means that you are a high-risk and face high interest rates and higher fees even if you are able to get a loan.
Fixing a low score:
Establish a record of paying your bills on time.
Keep only the credit cards you have – don’t apply for more, especially store cards.
Pay off your balances (starting with the smallest first).
Request a copy of your credit report annually and fix any errors through the three credit reporting agencies.
