Lenders use your credit score to determine whether you’re likely to repay the money they give you. On top of that, your score determines how much they’re willing to give you and how much interest you’ll hav to pay. Remember, lenders are in the business to make money; if they think there’s a risk that you won’t pay, they’ll charge you interest to help cover themselves in the event that you don’t.
More than 90 percent of lenders rely on your FICO scores, which are composites of your scores from the major credit reporting agencies.
FICO scores range from 300 to 850, and because they’re based on the most current information, they generally change every month.
While every lender has different criteria, generally accepted standards for credit scores are:
Again, every lender has a different definition of “good” credit, so your mileage may vary between financial institutions.
A typical credit score relies on several factors, including:
In most cases, a higher credit score equals better interest rates and higher loan limits.