In most cases, FICO score and credit score are used interchangeably but are these two terms actually the same?
We will talk about this here! But let us answer one main question you might have in mind.
What Is FICO Score?
For your information, we have broken down the details for the FICO score estimation.
- Payment history 35%
- Amounts owed 30%
- New credit 10%
- Length of credit history 15%
- Types of credit used 10%
Therefore, it basically depends on whether you have maintained a good payment record or not. Timely payments and clearing bills in full ensure that you have the best FICO score mentioned on your report.
What About Other Types of Credit Scores?
The credit score is a general term used to refer to a figure that shows your financial standing. However, the only difference is that they use separate formulas for calculation. Moreover, they also use a different scale to grade your score.
One other credit scoring system that is comparable to the FICO score is the VantageScore. Below we will compare who the grading differs between these two scales.
For FICO score, the divisions are:
- Poor: less than 580
- Fair to Good: 580 to 739
- Very good: 740 to 799
- Exceptional: 800+
In the case of VantageScore, the grading is as follows:
- Subprime: 300 to 600
- Near Prime: 600 to 660
- Prime: 661 to 780
- Super prime: 781 to 850
FICO score, assembled by credit bureaus, has been famous for a very long time. However, other types of credit scores are now also being extensively used. VantageScore has gained more popularity in the last year. Presently, about 12.3 billion users around the US use this scale. As compared to previous years, this is almost an increase of 20 percent.
Why Is FICO Score Important?
It does no matter whether you are using a FICO score or some other type of credit score. The only thing important is having a good figure on your report. Consequently, the credit score is used to determine your worthiness. A good score can get you many benefits whereas a bad FICO score means it would be difficult for you to get approved for credit cards or loans.
An excellent credit score can get you pre-approved mail offers, credit cards on good terms, and loans would also be approved more quickly.
However, if you are currently facing a poor credit score then there are many ways in which you can fix it.
However, it is always suggested to start with a good credit card. In this way, you can maintain a low credit utilization ratio and give out timely payments. These two factors are very important when it comes to maintaining a good score.
That’s it, folks! This is all you should know about the FICO score and how you can try to improve it. Furthermore, if you wish to add any more detail, feel free to contact us in the comment section below.