Understanding the standard FICO score in USA
FICO score is the critical parameter which is considered while you apply for a credit card or a loan. This
decides what interest rates and premium amounts you are eligible for. FICO score is more commonly
called as Credit Score in USA. A very low score can also lead to rejection in some scenarios like loans,
cards and jobs; hence it is compulsory to maintain. IF only you know how it is calculated you can take
care of it in a better way. Your credit score or FICO score can be found in the credit report issued by 3
Credit Bureaus in US: Experian, EquiFax, and TransUnion.
The exact formula to calculate FICO score is still a well guarded secret but here are the parameters that
1. 35 percent of score comes from how well you’ve paid debt in history.
2. The second most important factor is the ratio of your total credit capacity and amount you have
already used. This section contains a weight age of 30%.
3. 15% of your FICO score comes from the duration of your credit.
4. Another 10% comes from types of credits used like loan and revolving credits.
5. 10 percent comes from how many credits you have taken; every credit or loan impacts your score
The maximum possible FICO score is 999. Anything above 750 is considered as excellent and it is the top
category for a good credit score. People of this category enjoy the lowest credit interest (prime – x%).
The second category is for the 721 – 750 range. If you fall in this category you can still get low interest
rates but they won’t be lower than the prime interest. The 660 – 720 category only facilitates prime
financing while the lower category 620 – 659 is only offered sub-prime financing. The leper category or
330 – 619 is what makes you ineligible for credit cards and loans.
Merchandise cards are great if you wish to improve your credit score. These cards can be used for
merchandise shopping and have low APR and service rates in the beginning. When you pay back your
credits on time, your score will get better automatically.