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Credit Score Scale

The use of loans and credit cards demand the necessity of a credit score scale. The calculation of an individual's credit score depends on past payment history.
Scholasticus K Jan 25, 2019
The credit score is a derivation of credit ratings, history, and reports. These  parameters are considered while calculating credit score of a person. Credit reporting agencies follow specific mathematical formulas to get final score.
The most common mathematical model, used to derive such scores is the FICO model. Every bank, lender, credit card company, lending institution, and financial institution follows a guide for calculation. This score is considered by lenders while providing loans and setting interest rate.

FICO Model

  • This model includes 5 important elements while deriving the score.
  • First element is payment history, which is 35% of the number. It has information of your past payments.
  • Timely payment has a positive effect on the entire score.
  • The second element is the amount owed as of date, which accounts to 30%.
  • Too may accounts owed result into a negative number.
  • The third aspect is the length of the credit history and contributes to 15%. A long history is a down right negation.
  • 10% of the score is made up of new amounts borrowed.
  • The last 10% is contributed by the different types of credit.
  • The FICO rating is basically a numerical between 600 and 850.
  • The credit scale, arranged in ascending manner, gets segregated into 6 different classes with the poorest result starting from 600, and the best being 850.
  • This result is mainly used to derive interest rates, terms and conditions of the loans, and also used as a primary guideline in the process of approval of loan, credit card, or a debt creation facility.

Credit Score Scale

  • If you surf through different websites, you will find a considerable number of ratings, like good, bad, and poor.
  • These are the categories of scores that are used by lenders and companies to decide the approval and interest rate of a credit-related facility. The chart ahead, will give you a brief idea about the significance of these categories.

Credit Score And Their Rating

300 to 579 - Poor
580 to 669 - Fair
670 to 739 - Good
740 to 799 - Very Good
800 to 850 - Excellent

These categories help the reporting agencies, lenders, and credit card companies to comply with Fair Credit Reporting Act, Equal Credit Opportunity Act, Fair Credit Billing Act, and Fair Debt Collection Practices.


  • There are certain implications of these categories.
  • A very poor rating means you have a staunch possibility of facing denial for loans and credit cards.
  • A poor rating means you will get higher levels of interest.
  • Both these categories are considered bad, and those with such ratings can avail bad credit loans.
  • A fair rating has a good chance and priority to get loans.
  • The people of good and great score can avail loans and credit cards quickly, and have the advantage of lower interest rates.
  • The best category is the excellent rating that gets the best interest rates, and almost instant approval.
The credit score ratings scale is used for all your credit and loan related services, hence better your score, the lower is the rate of interest.