FICO Score Range

Sun, 03 May 2009 18:40:19 +0000

If you didn’t know there are several different ways to score credit and one of the most popular is by Fair Isaac. The actual FICO score calculation is extremely complicated and knowing it could work to your benefit. The reason is because where you fall on the FICO score range could save you thousands in interest throughout your life.

One concept individuals need to understand about the FICO score range is scores are often pooled together. Meaning there are certain levels of scores or groupings that you will fall in. So no matter where you fall in the grouping you will get the same interest rates as others with higher scores in the same grouping. For Example let’s say that you have a 705, you would be included in the same group as all individuals that have a 700 to 759 on the FICO score range.

The implications of this pooling are twofold. One is the fact you might be in the lower end of a grouping but you will still qualify for the same types of loans as individuals several points higher. Also, to improve the interest rate you are getting you will to go to the next higher pool of scores.

Here are the most recent groupings of the FICO score range from MyFICO.

760-850 Excellent credit score
700-759 Very Good
680-699 Good/Average
660-679 Below Average
640-659 Fair
620-639 Poor
350-619 Bad

These groupings on the groupings are always subject to change. Also, these are general rankings and can vary from lender to lender. Meaning it is actually the lender that really determines what is good or excellent.

What kind of money could have a higher ranking on the FICO score range save you? If you look at charts comparing your credit score versus a mortgage payment it might seem like much. If we compare a good versus excellent credit score you will save around $26,000 on a $300,000 30 year mortgage. But when you start to think about all the credit in your life having a better credit score will affect all your lending. So you credit cards, auto loans, and personal loans will have a better interest rate and therefore it will really add up throughout your life.

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FICO Score Calculation

Mon, 16 Feb 2009 18:42:49 +0000

To figure out your credit score you need to understand the basics behind the FICO score calculation. This is a complex formula that takes into account information from your credit report to generate a three digit number. There are five main area of the FICO score calculation and each has a different wieght.

The first 35% of the FICO score calculation is your payment history. This looks at how well you do paying your bills on time. This is the largest part of the FICO score calculation and looks specifically at any late payments you might have. It looks how frequent you pay late, how late were you in paying, and how long has it been since you have paid late.

The next 30% of the FICO score calculation is how much you owe. This is found by dividing your balances by your credit limits. This is done with each account and you also have a total utilization.

The next 15% of the FICO score calculation is your credit history. This looks at the average age of all your accounts and the age of your oldest account. The longer the history the better.

The next 10% of the FICO score calculation is your applications for credit. This looks at your credit report to see how many times you have applied for new credit.

The last 10% of the FICO score calculation is your credit mix. This looks at all your accounts to see what types of credit you are using. People want to achieve a healthy mix of credit.

This is just a general overview of the FICO score calculation because the exact formula is not divulged to the public. Also, the sub factors in each part interact with each other and create a high level of complexity.

If this still has you wondering what you can do to improve or what is a good credit score, you now have a basic understand of how the FICO score calculation works. This will help you think about your life and the different things that will effect it.

Also, check out how to get a free online FICO score.

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FICO Score Range

Here are the most recent groupings of the FICO score range from MyFICO.

FICO Score Calculation

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