Your FICO credit score is the main way lenders measure whether or not you're worthy of credit. It's important to keep your FICO score as high as possible in order to qualify for credit cards, loans and mortgages.
Score Range
FICO scores range from 300 to 850 with 300 being the lowest and 850 the highest. Few people are able to obtain an 850 FICO score, but the national median hovers around 711, according to the credit-reporting agency Equifax. Generally, a FICO score below 600 is considered high-risk and it's unlikely a lender will grant you credit.
Formula
FICO scores depend on a variety of factors. The Fair Isaac Corporation keeps the exact formula a secret, but generally the score's ratio is weighed 35 percent on your payment history, 30 percent on your outstanding debt, 15 percent on the length of your credit history, 10 percent on the amount of new credit accounts you open and 10 percent on the type of credit you use.
Improving Score
You have control over your FICO score. To improve your score, make payments on time every month, pay off as much debt as you can and limit the number of new credit accounts. Over time, your past mistakes will matter less and you'll see your FICO score increase.
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