Your FICO score has been likened to your “adult G.P.A.” If someone at your high school said they had a 3.0 you knew what that meant. But most adults don’t know how to interpret their FICO scores.
To start with, the FICO scores were developed by a company called Fair Isaac. They are designed to take the data in your credit report and boil it down to a number so that creditors can quickly gauge your credit worthiness without spending a lot of time on the details.
Believe it or not, the FICO has only been around since the mid-1990’s, but it has become incredibly important in your financial life.
The FICO score ranges from 350 to 850. Generally, anyone with a FICO score above 760 will receive the best credit offers. If you have a 770, there is little point in trying to get a higher FICO score. In fact, people with less than 10 years of credit history cannot break 800, just based on the way the formula is calculated.
If you have less than a 760, you may wish to work on your credit score. People with credit scores in the ranges of 620 to 760 are still credit worthy. However, a move of as little as 10 points can decrease the amount of interest you pay on mortgages, car loans, and credit cards.
Below 620, and you’re in credit trouble. You will probably have trouble qualifying for a mortgage, and if you do manage to get one, you will be paying through the nose for it.