Your FICO credit score can be anything between 300 and 850, and as a general rule, a good score is considered to be somewhere between 670 and 739, based on the FICO range. You can usually get your credit score from your credit card company, although it might be based on a different scoring system than the FICO system.
Five key factors affect your FICO score and any one of them can cause your score to decrease or increase - the amount owed on your credit cards and loans, whether you pay bills on time, any new credit accounts and the length of your credit history. And your score is also based on whether you can successfully handle different types of credit, such as a car loan, mortgage, and credit card. If you know that your credit score is low because of any of these reasons, it's worth addressing it to boost your score, especially if you are about to apply for a car loan or mortgage.
Of course, the higher your score, the lower your interest rate when it comes to loans, although the type of loan you are applying for can also determine what is considered to be a good score. To be approved for a major credit card with a competitive interest rate, you will need to have a score in the 700 range, although if you are applying for a FHA loan, as long as your credit score is at least 580, you will almost certainly be approved. The average score is around 700, so if you want an idea of how you compare to everybody else, that can be an accurate guide. If you have a FICO score of over 800, you can be described as having exceptional credit, while a score of 740 to 799 is very good, and a good score would be 670 to 739.
If you are applying for a mortgage or a car loan, the advantages of having a good credit score become obvious. The interest rate offered to you is based on your score, and even a small difference in the rate can make a big difference when it comes to the amount of your monthly payment. On a $200,000 mortgage, you can expect your monthly payment to be around $935 if your score is between 760 and 850; if your credit score is closer to 620, you can be paying $1126 each month.
And the same rule applies to credit cards; your monthly payment amount can be a lot less if you have good credit, although there are cards aimed specifically at those with a low credit score.
As can be seen, it's well worth taking steps to improve your credit score if it isn't where you would like it to be. It takes time to establish a good credit score, although you can potentially increase your score a little in just a few months, by paying bills on time, having a good credit mix and not opening too many new accounts.
Flynn Financial Group Inc