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What Is Credit Score?

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A credit score is the estimation system of your creditworthiness based on the numerical statistical methods. This number is calculated by a mathematical operation with the help of your certificate of credit. It works as a guarantee that you will be able to perform your credit duties for 24 months.

A credit score is a decisive factor when it comes to the approval/refusal of the credit.

Among dozens of credit-scoring models, the FICO holds the leadership. 90% of all financial institutions use this model. FICO is especially popular among mortgage lenders.

FICO score covers numbers from 300 to 850. It’s considered that a good credit score must be above 700 points. Then it’s a good guarantee that your credit will be approved. If you decide to apply for loans online, you will get much better options with higher credit. Let us inquire into different ranges of credit scores.

Credit Scores: Bad, Fair, Good

Whether we use a FICO score as a basis or not, bad credit score always starts from 300 to 579.

A fair credit score is a next range and it starts from 580 consequently. Lenders are leery of the borrowers with the score below 670 – usually, a good credit score starts with this number. The borrowers with the bad credit are more likely to be required to pay a certain amount of fee or provide a deposit to guarantee their paying capacity, which is a better option than being not approved at all.

Applicants with the fair FICO credit score have more chances to get a loan though they are considered to be subprime – risky – borrowers.

Credit scores are not those strictly fixed numbers and also there are scores by VantageScore (was created by 3 major credit bureaus: Experian, Equifax, and TransUnion). And yet, the applicants with the score above 670 (in certain cases, the desired number starts with 700) will probably be able to get better interest rates on loans and credit cards as this is a so-called “good credit score”.

A FICO Score above 740 is considered a very good credit score, giving more advantages and better rates.


But even if you don’t have a good score, there is always an opportunity to improve it and build a better one. It will take some time to change the score for the better – the information on your credit report and steps you are going to take will have a direct impact on it.

Among the categories that are included in the credit score are:

  • a payment history (35%),
  • amounts owed (30%),
  • a length of the credit history (15%),
  • new credit (10%),
  • types of credit used (10%).

There are some free online resources such as Credit Karma, Wells Fargo or What’s My Score where you can calculate your credit score for free. Having a good credit score is essential for credit approval. Nevertheless, this issue can be improved by paying your debts and loans on time.