FICO Score Ranges: Where You Want to Be

Your FICO score is one of the most important numbers in your life. Almost everything you do will be affected by it. Whether you are buying a car, a mortgage, a boat or anything else your credit will be one of the key factors of the approval process. Many people do not know much about their credit. If they do know their own credit score, they do not really know what it means. Let's review what your score means:

Score Basics

Your FICO score is made up of several factors. It is a compilation of your entire credit history. The information is compiled with information from the three major credit bureaus. Almost everything you do with money will affect the number, good and bad.

When making a lending decision, lenders will undoubtedly place a large emphasis on your score. With a good score, you will pay thousands of dollars less in interest over the course of your lifetime. A good score will allow you to do more things with your money.

How Your Score is Determined

Your FICO score is determined by several different things. One thing that contributes a large percentage of the score is your payment history. If you consistently make late payments, your score will go down. Another factor is the amount of accounts that you have open. If you have five or six different credit cards all with balances, this will probably go against you. Keeping your cards maxed out on a regular basis will be detrimental as well.

What is a Good Score?

Information on this subject varies widely. What some people consider a good score, is not the threshold that others consider to be good. According to most of the information available, a score in the high 700s is a good score. If you have a score in the 800s you are in fantastic shape. Anything below 620 is a bad score and could be a sign of some serious financial problems in the past.

Where Do You Want to Be?

The average FICO score is 723. If you are near this, you are in pretty good shape. You will be able to obtain a loan for most things that you want. If you have a score in the high 700s and 800's you will be privy to the best rates available in the industry. The money you save on interest each year will add up quickly. You will be able to save more money to spend on other things and enjoy a better quality of life.

If you currently have a score in the low 620s or lower, you will want to try and raise it as quickly as possible. You should order a copy of your credit and review it for accuracy.

If the items are not correct, write dispute letters and mail them out to the creditors. If the information is correct and your score is still low, work on raising the score by making timely payments and keeping your balances low.

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