How fit is my FICO score?
Article brought to you by Ollo and authored by Shannon McLay, Personal Finance Expert and Published Author.
FICO® scores, which are used by many lenders for their credit decisions, fall within the range of 300-850. But what is a fit FICO Score? Read on to learn more about the different ranges of credit scores – and how you can better understand your financial health.
The very fit score
If you have a FICO Score of 740 or higher, consider your score very fit. You’re in the top 40% of U.S. consumers and have demonstrated to lenders that you are very dependable with your credit.
With your fit credit score, you will find that lenders will offer you things like car loans, credit cards and mortgages; and they not only want to offer these to you, but at lower rates than some of your peers with less fit scores. When your FICO Score is a 740 or higher, you may frequently receive letters in the mail for new credit cards with perks like travel rewards or cash back. You will likely have several options of credit card companies and offers to explore.
When you need to make larger purchases for a car or a home, with your very fit credit score, you will have access to lower interest rates or better monthly payments. Lenders have a good reason to believe that you will treat them like they want to be treated. For example, by paying your bills on time and paying them back in full, lenders are more likely to work with you and have a long-term relationship with you. Having a high FICO Score can open many doors and put you in charge, having access to various lending opportunities and good rates.
The good credit score
If your score is between 670 and 739, you’re in good shape. Although not extremely fit, your score is attractive nonetheless and near the average for U.S. consumers. Having a score in this range is considered “good” by many lenders.
Although there may be multiple options for loans, they may be offered at higher interest rates than for your extremely fit peers.
Fair credit score
Credit scores between 580 to 669 are considered “fair” and some lenders may offer you credit.
Large banks and credit card companies may dismiss you for higher credit scores; however, niche lenders and smaller companies are out there looking for diamonds in the rough. They may be willing to take the time to get to know you better and they may come around eventually and offer you unsecured credit.
Just be aware you likely won’t be getting the same offers or interest rates as your more financially fit peers, which would mean paying more money in interest over time.
Not so fit credit score
FICO Scores below 580 represent the bottom 20% of U.S. consumers.
If your FICO Score is below 580, there really aren’t many lenders out there for you. There may be some car dealers or short-term lenders who will give you a try for a few years; however, most of the lenders may stay clear of you.
The lenders that do want to serve you may offer you higher interest rates and additional fees. They may even require you to pay cash to secure a credit card with them.
The good news is that if you are in this range, you have the potential to impact your credit fitness. With a solid plan in place, you could be in a more fit FICO Score range within a year.
You should make your payments on time, keep your balances low and limit new credit until you get your current obligations under control.
How anyone can positively impact their score
The good news is that all of us are capable of attaining healthy credit. Your credit score is based on your activity over a period of time, so getting fiscally fit and paying your bills on time can help you reach your personal goals.
While each lender has different credit criteria and a credit score is typically just one aspect that is considered in your application, your credit score gives lenders a snapshot of how good you are with the money you borrow.
It’s important to pay your bills regularly and on schedule. Not only that, but lenders want you to keep your loan balances under control. So if you want your credit to be in shape, play it safe with credit and be consistent.
Even if you have some missteps along the way, if you regroup and put a plan in place and prove that you learned your lesson, you can impact your credit over time.
This article is provided to you solely for education purposes. It is not intended to provide you with any specific legal, investment or financial advice and you should not solely rely upon this in making financial decisions.