What is a good FICO score

What is a good FICO score?

What is a good FICO score

What is a good FICO score?

Are you looking for the finest finance rates around? Then you need to make sure you have a positive FICO score. Don’t know what that is? Well, it’s pretty important. Having a strong knowledge of exactly what this score represents as well as what factors come into play in affecting it will help you in better assessing your financial situation. Once you’ve understood your FICO score, then you can move onto the next step of finding the best lender for your situation.

Defining FICO Score

Ultimately, the FICO score was brought about by the The Fair Isaac Corp in order to have a means in assessing a person’s credit score. Many factors of this score are taken into consideration when assessing whether or not you a provider should lend you credit. Having a high score is positive and means that providers and insurers have higher chances of lending to you.

Is my Credit Score Good or Bad?

The latter is determined by the number accompanying your FICO score. On a score ranging from 300 to 850, a credit score of 700 or more is usually seen as positive. Of course, one of 800 would be considered as excellent. The average credit score ranges approximately between 600 and 750. It is always important to keep in mind that making good credit decision directly affects your FICO score and can encourage providers to lend you money. A good credit score demonstrates your aptitude to follow a repayment plan.

Loan providers, credit card companies, banks and car dealerships all use credit scores in order to determine if they’re offering you credit, such as a payday loan or a credit card, or not. A credit score can also determine under what terms the credit can be offered, such as the interest rate or down payment. FICO isn’t your only credit score, many types in fact exist.

Why is a Credit Score so Important?

Generally speaking, a credit score is a tool aimed towards allowing personal loan or credit providers determine your likelihood in repaying a loan. In other words, a credit score is also known as a risk score for it equally determines the risk of not respecting a repayment plan.

Let’s be honest here, good credit truly comes in handy. When faced with any financial emergency, your credit serves to determine whether you qualify for or a loan or not and even goes as far as affecting the interest rate on your loan. A good credit score can save you thousands of dollars in payments – but not only that. A positive score allows you to obtain what you want, when you want it – including an apartment, a cellphone and a vehicle.

For sake of comparison, one can view a credit score as a scholarly report card. However, instead of letter grades or percentages, the scores are placed on a range. However, keep in mind though that your credit score is stored, the obtained number is never final for it is on a continuum. A credit provider can bring up your credit score whenever necessary and can do so using their prefered model.

Many life goals, such as purchasing a new car or buying a first home, take credit score into consideration and therefore, having a positive one can only be beneficial. Here again, your credit scores becomes a determining factor in whether or not you qualify for a loan and what the terms of that said loan will be.

A credit score contains much more than the number-range. It also includes factors such as total amounting debt, types of credit, credit account history as well as derogatory marks – all of which are equally taken into consideration when requesting a loan. More so and depending on the type of loan you’re requesting, it is even possible that loan providers look at your debt-to-income ratio, or the balance between your income and spending habits.

Improving Credit Score

Although different models can be utilized in determining your FICO score, five basic factors primarily affect your credit score. Although all five are of great importance, the leading factors tend to be making your payments on time and keeping credit use to a minimum.

Paying on-time

Always keep in mind that a minimum payment is better than no payment at all! Payment history is the leading factor in determining your FICO score and a late payment can really hit hard. More so, the later you are in paying the bill, the greater the credit damage becomes. Above all, when possible, it is best to complete payments in full each month in order to avoid debt accumulation as well as keeping a positive credit score.
Of course, bankruptcy and other heavy and negative marks on your credit report can directly hit your scores, and such for several years to come.

Keep credit use to a minimum

Having a credit card or a line of credit doesn’t mean maxing them out as quickly as you can. Quite the contrary in fact, in order to keep a positive credit score, it is very important you only use a small percentage of your available credit at a time. Doing so not only keeps your credit score in the positive range, but such can also help improve a negative credit.

In other words, overall credit utilization is how much available credit is used at any given moment. The latter can be determined by dividing total credit card balance by total credit card limit – the obtained percentage is a factor in credit score and often related to lending risk. In most cases, 30% and lower is considered a good usage.

What Happens if I Have No Credit?

It is possible that your credit history isn’t long enough to properly establish a credit score. However, there are several ways to start building credit, depending on how old you are.

If under 21 years of age, having a parent cosign for a credit card is a great way to start building credit. Obtaining such is accomplished through proof of steady and reliable income that will allow you to repay any loan.

Should I Borrow Money With My Bad Credit Score

Should I Borrow Money With My Bad Credit Score?

Should I Borrow Money With My Bad Credit Score

Should I Borrow Money With My Bad Credit Score?

No one is immune to financial disaster and many of us have probably all caught ourselves thinking: “I need to borrow money now with my bad credit“. You might also start to panic due to the fact that you have a poor credit score – but before you do – keep reading this article.

So, if you find yourself in a situation similar to the one described above, how do you borrow money? First things first – it is going to be more difficult! Now that we’ve gotten that out of the way, let’s make something clear, it’s NOT impossible.

To the contrary in fact, there are ways to obtain a loan even if you have a negative credit or FICO score. In reality, bad credit can actually be accepted in several different scenarios – both for secured and unsecured loan products, too.

It all comes down to whether or not you should take advantage of this financial option even with a poor credit score. Well, to figure your answer out, take a look at the following question:

Do you Have a Viable Reason for Borrowing Money?

Basically, now is the time to ask yourself if you’re borrowing for the right reason. Are you borrowing money so you can spend it on something, or is it in order to improve your credit score? Keep in mind that one of the only reasons a person with poor credit should be borrowing money is to better their credit score. Any type of credit loan should uniquely be used to pay off the most urgent debts or to help create a positive repayment schedule and increase your credit rating.

If you’ve decided to take out a loan in order to pay off a few of your most important debts, than consider the consolidation loan. Such is one of the most common loans requested by individuals having difficulty with many payments and desire to have one monthly payment instead to pay everything off at once. Doing so, this process will equally help improve your credit rating.

Requesting a loan and using it to build a gameroom in your basement is probably not your best bet. In fact, doing so would be putting you back on the exact same path that gave you bad credit in the first place. If you can’t afford to pay for the renovations out of pocket, than you simply can’t afford it and the outcome will result in heavier debt and an even lower credit rating.

Important Points to Keep in Mind with Bad Credit

You should always be careful when it comes to borrowing money with bad credit. For example, borrowing money to pay of debt can lead to a vicious cycle of borrowing more money to pay off new debts and so on and so forth. As the saying goes, “there’s no use in robbing Peter to pay Paul”. In other words, the above situation only leads to more debt and a rapid decrease in credit score.

Requesting a loan with bad credit is, of course, more expensive. It is only natural that if you’re going to borrow money with a poor credit rating, then lenders are going to offer the highest interest rates possible. Depending on what percentage you succeed in obtaining, interest rates can make a loan extremely difficult to pay back. If you aren’t 100% sure that you can handle the repayment schedule, then avoid borrowing altogether before getting trapped in more debt.

If you absolutely need to borrow money and you’re dealing with bad credit, then you should take the time to look into different payout methods such as payday loans or cash advances. Despite the myths surrounding the latter methods, such are very different from traditional loans and might just be the most beneficial way for you to receive cash fast.