good, fair, or poor credit? It's all in your FICO score

So many people spend their time trying to find the best interest rate, or lowest points when what they should do is work to improve their FICO score to get the lower rate.

If you have ever had a credit card, a loan or bill payments, you have a FICO score. FICO stands for Fair, Isaac & Company, the firm that created the computer model used to create your credit score by gathering data from the three major credit bureaus (Equifax, Experian and TransUnion).

FICO scores range from 300-850, with the average being about 640. However, it’s the 720-850 range that’ll get you the choice rates. So these days, rather than pour over your credit report, a lender simply pulls your FICO score and assigns you a rate based upon what range your score falls within.

Based on current rates, here is what you can expect to pay based upon what FICO score range you fall under:

FICO score range / corresponding interest rate

720-850 = 5.66%

700-719 = 5.78%

675-699 = 6.32%

620-674 = 7.47%

560-619 = 8.53%

500-559 = 9.29%

The FICO score is calculated based upon 5 elements of your credit report: 1) on your payment history (35%); 2) on the amount and type of outstanding debt you owe (30%); 3) on the length of your credit history (15%); 4) on the number of new accounts opened recently (10%) and; 5) on the types of credit you use (10%).

I'll write more soon about FICO scores and how you can improve your credit rating.

Michael from ezLoanApply