Not everyone knows what a good or bad credit score is. First, let’s establish what FICO is. FICO stands for Fair Isaac Corporation. FICO is what we call our credit score. Most people do not know what their own credit score is. Many times they go to apps like Credit Karma or Credit Sesame to see their score. However, The problem with these apps is that they are not accurate. They are not giving you your actual score, they are simulating a score based on your credit situation.
What Is A Good Or Bad Credit Score?
We put credit into three categories: Excellent, Good and Poor. Excellent credit is 700 or higher, Good credit is 640 and poor credit is 500 and below. However, There are special circumstances where someone can get approved for a home loan with a 500 FICO. But don’t come with a 500 FICO expecting Downpayment Assistance, it doesn’t work that way.
How Does FICO Effect My Interest Rate?
Your FICO score determines if you are good at managing your money. Yet, a poor FICO score may be the result of a job loss, divorce or bankruptcy. Sometimes life happens and we get caught in a difficult place where bills don’t get paid on time. In this case, it may take some hard work and discipline to get on track and up your score. There are a lot of factors that determine the rate but your score does play a large role. The higher the FICO score the lower the rate will be. The lower the FICO score the higher the rate will be. There are times where taking the higher rate to get approved makes sense. This is where refinancing after your FICO score raises would work.