FICO score: What to know and how to improve it
Credit scores matter in instances ranging from qualifying for a mortgage to buying a car. The Sum tells you what to know about your FICO score.
What is a FICO score?
A FICO score is a three-digit credit score ranging from 300 to 850 — and up to 900 for some industry-specific scores.
What do they tell us?
These scores are largely based on your credit reports and can help creditors assess how likely you are to repay debt.
Why is your FICO score important?
The higher your credit scores, the more likely you’ll end up with better rates and terms on your loan. With lower scores—if you’re approved—it may be with worse credit terms.
How do you improve your score?
- Set up a secured credit card. These are supported by cash deposits that often equal your credit limit. Then, you can build up credit to qualify for a better.
- Pay your bills on time.
- Credit card balances should be at least under 30% of your limit.
- Try not to apply for several accounts all at once.
- Don’t close old credit accounts.
Sources
- Credit Karma: What is a FICO® score?
- USA.gov: Credit Reports and Scores
- Experian: What Is a Good Credit Score?
READ MORE ABOUT THIS IN THE SUM
The Sum breaks down complex economic issues and how they impact your life in just a few minutes a day. Follow thesum.news on Instagram for the full story.
This story was originally published October 10, 2022 at 1:05 PM with the headline "FICO score: What to know and how to improve it."
