A credit score is a three digit numerical expression which determines the credit worthiness of an individual. A credit score is primarily based on an analysis of various credit reports and information collected from feasible sources. A statistical model is used for the comparison of various parameters of an individual such as Number of Accounts, Type of Accounts, Outstanding Debt, Late payments etc.

The credit scores are usually utilized by lenders who offer to lend a loan at different percentages of interest to an individual. If you have a good credit score, you are entitled to a loan for a lower rate of interest than with a bad credit score.

This methodology was first developed by Fair Isaac Corporation (FICO) and thus the score came to be known as the FICO Score. It has a range of 300 to 850 points. These credit scores are not only used by creditors and bankers but also by companies, before they give you an employment or a lease agreement or even a rental agreement. Thus it becomes important for an individual to be aware of his credit score rating and raise it to the best fragment.

Good FICO Score

700 to 850 – The best score in the market, you cannot have problem getting a loan.

680 to 699 – This is rather a “Good” category, but not the “Excellent”. However, individuals in this category are regarded as trustworthy borrowers.

620 to 679 – This is the “OK” category. The individual is required to provide certain additional information, guarantees as well as references.

Low FICO Score

580 to 619 – This is the starting stage of the bad credit, however it is not bad as yet. For individual in this category, it is time they start paying attention on improving their credit scores.

Bad FICO Score

500 to 580 – The borrowers with this credit score probably have to pay more interest on the loan acquired. This is where the real trouble begins since an individual in this category does not have many options left.

499 and below – This credit score will destroy you financially. So you need to clean up the previous debts and then move further.