So what does the credit score mean exactly. The FICO credit score has a range from 350 to 850. The higher your credit score, the better it is for you as it is supposed to mean that you are more credit worthy. The scores measures your likelihood of fulfilling your commitment on a new or existing credit over the next two years. In order to calculate the risk, the credit scoring model is compared historically to other consumers whose scores range within a few points of your own.
In other words, for certain range of credit score, there is a certain rate of delinquency over the next two years that is ascertained by the fico credit score .
For example, if your credit score is 599 or below, FICO sees that there is greater than 50% chance that you’ll fall behind on existing or new obligation over the next 2 years. Or perhaps even filed for bankruptcy. This does not mean that you will definitely default. It means hat there is a greater chance that you won’t pay a future bills on time.
The following table represents the FICO credit score range and the rate of delinquency associated with it.
|Credit Score Range||Delinquency Rate|
|350 — 499||87%|
|500 — 549||71%|
|550 — 599||51%|
|600 — 649||31%|
|650 — 699||15%|
|700 — 749||5%|
|750 — 799||2%|
Remember that the most important part about your credit history is the current status of your accounts. So if you’re behind on any account that is not defaulted, which is usually 120 days after the payment was due, contact the creditor to find out if you can rehabilitate them and start bringing them current.
If they have already been charged off or passed for collection, you may want to consider another strategy such as negotiation. The odds are that the accounts that have already been charged off or given to a collection agency have already had a negative impact on your credit score. Settling these account and having the “settled” status show up on your credit report will not worry your credit score too much because the negative impact that have already happened.
Once you have paid off any negative account and start paying your creditor on time, your credit score will keep increasing every month that goes by.