Credit does allow a person to enhance his or her lifestyle based on future income, and presently finances most purchases made by people. FICO stands for the Fair Isaac Corporation and a FICO score is a credit score model that is in use in the United States. A FICO score range, will give a measure of the risk of default that depends on the financial history of the person being assessed. Ensuring that the score remains within acceptable standards is a problem that most Americans are familiar with. This FICO score range is especially important when the economy takes a downturn.
Methods to Assess FICO Scores
Most methods to calculate are secrets of the companies who make such credit assessments and is likely to give weight-age to the payment history, the utilization of credit, the number of years for which the person has a credit history, the types of credit used and inquiries made in recent times for credit, A higher weight-age is given to payment history and utilization of credit, as this is of the greatest interest to lenders. Credit history does pay a significant part in credit scores. All the other factors help lenders in their marketing efforts. Credit limits on cards can also give a higher credit score, with higher limits and lesser utilization making the person more credit worthy. Money owed to court judgments can pull down the credit score, while opening of multiple credit accounts for consumer finance can affect the score negatively. Previous bankruptcies and loan defaults can also affect a FICO score, and putting them behind you is a long drawn out affair.
Acceptable Credit Scores
A FICO score range varies between 300 and 850, with median scores depending on the economic climate. The present median scores are in the range of 720, and when a person has a score in excess of this, he or she is considered a very good credit risk and lenders will offer the best rates for any money loaned to a person with such a score. When scores below this median, lenders will be more careful in extending credit and may even ask for higher interest and stiffer repayment terms. When a FICO score range is between 675 and 720, credit is still easy, but may invite more thorough scrutiny of a proposal, before any offers are made. When scores go below 620, credit is almost invariably denied. Even where credit is given, it normally involves getting guarantees from people who have a very good reputation. Reaching the nadir level of 300 is akin to being cast out from the market and being considered a pariah as far as credit companies are concerned.
It makes sense to keep a FICO credit score range between 720 and 850 if one wants to avail of credit. A credit score can be corrected if proper attention is paid to the factors that influence credit scores. Financial discipline is a must, and regular payments without defaults can go a long way to bringing your credit score above the magic figure of 720.
Credit scores depend on the information about your transactions and errors can creep in here, and cause your score to drop. It is always better to keep a constant check on your credit ratings and the information that goes into deciding this. You can always dispute any mistakes and ask the credit rating agencies to make necessary corrections if you can prove them wrong. You are legally entitled to a copy of your credit report once a year from any of the credit agencies. If you want to fall into the beneficial FICO score range, it makes sense to be vigilant about this.
