FICO Score – Credit Worthiness Rating

Most people know how important their FICO score is, yet many are still unaware of exactly what a FICO score is. A FICO score is a number given between 400 and 800. Obviously, the higher the number the better your credit worthiness is in the eyes of the lending companies. However, there are several different variants to the system that are now being used by some of the other companies.

Basically, you are rated by how timely your payments have been made to creditors and the time it takes you to pay off a debt. If you are late on your payments it gets reported to the credit agencies and then there is a black mark so to say placed on your credit report. Another reason your credit score can be lowered is if you have several different companies pulling your credit report. This seems to throw up a red flag to other lenders. If you are constantly late on your payments and the longer it takes for you to make your payments can drastically reduce your credit score and cause you to have problems borrowing money, getting loans and even credit cards.

Typically a credit score of 620 to 580 is considered to be an average credit score. Anything from 720 to 800 is considered to be excellent credit score, and this can help you get much better loan and other credit options. If your credit rating is in between the 620 and 720, your FICO will be looked at a little more carefully as a precautionary measure.

If you are applying for a loan or a line of credit, the issuing company of the funds will be looking more closely at your FICO score to determine the interest rate you will be required to pay as well as the amount of funds you are eligible to receive. This can also be used to determine your credit worthiness and whether you qualify for the funds at all.

There have been multiple changes in the lending system over the past years. It used to be only those with excellent credit would qualify for a loan or line of credit, however that is no longer the case. Many companies have established themselves just to meet the needs of the less credit worthy people. In these cases the companies often will lend the funds and in return charge a larger interest rate.

Even with the changes that have been made for lending funds, the same remain true in all cases. Your FICO score is always taken into consideration when you are applying for funds of any kind. Some lenders will only use the score as a means for determining the interest rate and others will use it to determine a loan itself.

Even those that do not have the best credit history still have options available. Among the best options is the one to higher the credit score. Making a budget and paying your debt in a timely fashion will show on your credit report. These positive marks on your credit will soon bring a rise to your FICO score. Avoiding over spending and high interest rates on your credit cards is among the best ways to increase your FICO score.

         

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