It is very important for an individual to maintain good credit report and rating. With bad credit rating, you will put your financial future at big risk. If you are totally ignorant about fico credit score range, then it is better to take few minutes to read this article. There are also many websites, where you can read more details about investment and credit related information. You can check, www.investopedia.com, if you want to read comprehensive and diversified information on credit.
Before knowing what credit rating is, let us know what is a credit. The money obtained as the loan is an example of credit. Here, when you are getting the credit, you assure that you repay the money in stipulated time. If you repay the money on time, then you will obtain a good credit rating, else you will be awarded bad credit rating. The rating is offered by credit bureaus by looking into your present and past credit history. Some of the popular credit bureaus are TransUnion and Equifax. Even though all the credit bureaus look into the same credit history of an individual, the evaluation process may vary.
You may also come across the term – FICO score on your credit report. FICO stands for Fair Isaacs Corporation, which created the software for calculating a credit score. Usually, the scores range from 350 to 850. In addition to the credit scores, the credit rating system is also used in most developed nations like Canada and U.S.
As soon as you borrow money from a lender, the latter will send credit information to the credit bureaus. The credit bureaus will give the score or rating based on the information such as past credit performance, current debt, and application for new credit.
When you are applying for a loan, or even when you inquire about a loan, your credit checking will be checked by the prospective lender. When you have a better credit rating, you will be able to get credit cards and loan. You can get a loan, even if you have poor credit score, but with a higher rate. In this way, credit score impacts your financial life in many aspects.
Now let us provide some tips for maintaining a better credit score. First, you should never fail to pay the loan repayment on or before the due date. You should try your best to keep the outstanding debt minimal as possible. It is not possible to build good credit rating in overnight. However, it is easy to damage your credit rating in few days. Keep a check on your credit score regularly. Sometimes, the credit bureau can commit errors in giving rating. So, checking the credit rating regularly will help rectify errors as quickly as possible. You should use your credit cards wisely. Using too much of credit card puts you at more risk. Avoid buying too much credit cards as it will increase your credit risk.
There are also services, which can help you fix the bad credit rating. You can seek such services, to recover from bad credit score. In short, you should never hesitate to pay attention to your credit score.