Your credit score is used to indicate how likely you are to pay back the money that you borrow. Credit can be a confusing concept and our team wants to help you understand the important details. Today, the Quick Loans blog is here to answer some common questions about credit scores.
What Is a FICO Score?
FICO is a data analytics company that specializes in credit scores. A FICO score is just one version of the many credit scores used by lenders. Most FICO scores are based on the credit scoring categories that we’ll discuss later in this blog.
What Is the Common Credit Score Range?
The typical credit score range is between 350 and 800, with 800 being the very best score you can receive and 350 being the lowest. The higher your scores are, the more likely you are to qualify for loans and credit cards at favorable terms, which will save you money. With lower credit scores, it’s more difficult to get approval for loans and credit, and you’ll pay more in interest for the credit you borrow from a creditor or lender.
How Are Credit Scores Calculated?
Creditors make calculations based on the data included in your credit reports. Most scoring models analyze your payment history on loans and credit cards since past payment performance is usually considered a good indicator of future performance.
However, credit bureaus also look at the following pieces of personal financial data:
- Length of credit history — how long you’ve had accounts open
- How much revolving credit you regularly use
- The types of accounts you have and the individual uses (auto payments, a mortgage loan, credit card bills, etc.)
- How often you apply for new credit
- The amount of money owed by an individual
Why Is It Important to Improve My Credit Score?
Having a great credit score provides many advantages, including better deals on car insurance and getting approved for a home mortgage or an auto loan, among other things. When you ignore your credit score, you risk being turned down for loans, credit, a job, or even an apartment rental.
What’s Not in a Credit Score?
Your salary, age, and employment history don’t factor into your credit scores. There are other things that aren’t included in your credit scores, such as:
- Where you live
- Marital status
- Your total assets
Where Can I Get a Quick Loan?
In order to improve your credit health, it’s important to understand the basics of credit scores and recognize the factors that go into your score. At Quick Loans, we do not check your credit scores but we do check other consumer reports when you apply for a loan. If you’re recovering from bad credit, consider applying for a secured loan today.