Your FICO score, which is also known as your credit score, is a number which reflects on your past and current financial activities. This is used by potential lenders who gauge the risk you put forward in case you want to borrow money. A higher score is better as you are likely to make payments on time and you appear as trustworthy to potential lenders. While a lower score will only result in high interest rates when you are borrowing.
How Is My FICO Score Calculated?
This is usually determined by the information that is found in your credit report which has a record of all your financial activities. This is then entered into a complicated mathematical formula which results in 3 digit numbers that is between 300 and 850. Some of the factors that are the length of history, type of credit, credit inquires debt ratio and your payment history. You should always check your credit report so that you can make sure that there are no errors as this may cause you huge problems in the future. You should do this at least once in a year as errors are very common in credit reports.
What Is The Average US Credit Score?
Your credit score will lie between 300 and 850. 300 is the lowest and worst credit score you can have while 850 is the highest score and the best one you can have. Not many have the extremes as most scores usually lie in the middle. The average score for the US is around 720 which means that if you have a score of over 700 you will get good loan rates. Those with a score of below 600 usually get not so favorable terms on their loans where they get high interest rates due to their low scores. You should always remember that your credit score is one of the of the major credit rating system that is used in the united states. When you are going to enquire about your credit score, you should ask for the three major forms of credit ratings. This will help to give you insight on where you stand in regards to your credit rating. This will also be of great help as you will get to know how the lenders will react when they see your credit score.