In the United States, the Fair Isaac Corporation, known to most as FICO, uses a credit score number as a quick assessment as to the risks of lending to a particular individual. The credit score range goes from 850 at the top to 300 at bottom. It consists primarily of a rating that shows how likely you are to pay your loans back on time, and how good you are at maintaining a low balance in loans. The higher the number, the more you will be able to borrow and the lower interest rates you will enjoy. If you are at the top of the credit score range you can expect to save thousands on your car loans, home mortgage and direct lending loans.
The Preferred Lending Credit Score Range Is 750+
Anything from 750 to 850 is typically considered a top tier credit score, showing that you are very responsible with debt and can be trusted to pay your bills on time. It takes years of low balances and on time payments to maintain a score here, so any bank that you ask for a loan will know that you are highly unlikely to default. This will result in you getting pretty much any amount you realistically need, along with a low interest rate on the repayment.
The Average Approved Lending Credit Score Range Begins At 650
Anything from around 650 to 750 is considered good, and is a great place to be, though it’s not quite as ideal. Below that you get to the point where you are more of a risk. In other words, you have likely missed payments in the past or already have significant credit card or other debt. Banks are simply not going to be as willing to lend to you, and when they do, it will be at a higher interest rate.
The two biggest things you can do to raise your score is pay your bills on time and keep a low balance on your credit cards. Combined, these two factors account for well over half of your overall score. This is because they are the most relevant factors in determining your risk as a lender and the first thing most banks take a look at.
Also note that if you have never had any loans or credit extended to you, then you also have no FICO score. This is actually not good, as you simply have no history for a lender to go on. If you intend to apply for a mortgage or a car loan in the future, the best thing to do is get a credit card or two and charge a small amount onto them each month, and pay them off right away. This will not cost you any interest, and it gives you a history of on time payments. This will help keep you at the top of the credit score range.