Twenty-three percent of Americans have a collection agency on file with their credit bureau. That means they have bad debt. Missed payments and bad debt hurt your credit score.
There are a few different scales used by credit bureaus to assess borrowers. One of the most common is the FICO score, issued by the Fair Isaac Company.
While many Americans know their FICO score, not all know what it means. What’s considered good credit and what’s considered bad credit? What’s the lowest FICO score on the scale?
This quick guide will tell you everything you need to know about your FICO score.
The Highest and Lowest FICO Score
What’s the lowest possible credit score you can have? Well, it depends on which scale you’re using. FICO scores are just one measure, but many companies use them as part of a borrower’s average score.
The FICO score itself ranges from 300 to 850. That means 850 is the highest possible score, while 300 is the lowest possible credit score.
Defining Poor Credit and Bad Credit
Obviously, a score of 300 is bad, while a score of 850 is excellent. What about all the numbers between? What exactly do lenders consider a low score?
FICO scores are broken into ranges, with different ranges indicating the risk of lending. The higher the number, the less risky it is to lend to this person.
FICO scores ranging from 580 to 669 are considered fair, while anything between 300 and 579 is very poor.
Some lenders consider anything under the 670 mark to be “bad credit.” People with bad credit generally have a harder time accessing financing. So you don’t have to have the worst credit score to be denied a loan.
The Other End of the Scale
Lenders see consumers with scores higher than 670 as those with good credit. These borrowers are broken down into categories as well.
Those with very good credit will have a credit score between 740 and 799. Those with exceptional credit score between 800 and 850. These borrowers are considered “superprime,” and they may get better rates.
There is good news. In annual surveys, the number of people with bad credit has dropped and the average credit score has risen.
Fixing a Low FICO Score
Whether you have a low score or just want to build credit, there are many steps you can take.
Payment history makes up about 35 percent of your score. Making regular, on-time payments can help your score a lot. Think about small payday loans to help boost your score.
Paying off debt also helps. Again, these small loans can help you build credit or repair a bad score.
New credit, your credit mix, and the length of your credit history are also factors.
Improve Your FICO Score Now
Whether you have the lowest FICO score or not, it’s easy to start rebuilding your credit. You can apply for a small loan today and start working toward a better FICO score right now. It really is that simple.