FICO Score

Your FICO score is the most important number in consumer finance. It determines whether you get approved for loans, what interest rates you pay, and even affects job applications and rental approvals.

FICO Score Ranges:

• 800-850: Exceptional (qualify for best rates)
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

What's in Your Score:

1. Payment History (35%): Most important factor. Even one 30-day late payment can drop your score 100 points. Bankruptcies and foreclosures devastate scores for 7-10 years.

2. Credit Utilization (30%): Percentage of available credit you're using. Keep under 30%, ideally under 10%.

• $10,000 limit, $2,000 balance = 20% utilization ✅
• $10,000 limit, $7,000 balance = 70% utilization ❌

3. Length of Credit History (15%): Average age of all accounts. Older = better. Don't close old credit cards—it hurts this factor.

4. Credit Mix (10%): Having diverse types (credit cards, auto loan, mortgage) helps slightly.

5. New Credit (10%): Too many hard inquiries (applying for credit) in short time hurts score.

FICO vs. VantageScore: FICO is the industry standard (90% of lenders use it). VantageScore is used by Credit Karma and similar apps—scores differ by 20-50 points.

How to Improve Your Score:

Fast (1-2 months):

• Pay down credit card balances (boost utilization)
• Become authorized user on someone's old card

Medium (6-12 months):

• Pay everything on time (rebuilds payment history)
• Request credit limit increases

Slow (2-7 years):

• Time heals all wounds (derogatory marks age off)
• Bankruptcies disappear after 7-10 years

Impact on Loans:

• 760+ score: 6.5% mortgage rate
• 680 score: 7.2% mortgage rate
• On $400k loan, that 0.7% = $74,000 extra over 30 years