FICO credit scores are used by lenders to determine the creditworthiness of a borrower. The range of scores is between 300-850. The higher the credit score, the consumer is determined to have better credit, and for the lender, less risk is involved on average when providing a loan. Those with credit scores above 620 are considered good credit, or prime credit. Consumers with scores under 620 are considered subprime credit.
How Does a Prime Credit Score Affect My Loan?
An applicant with a higher credit score, in this case someone with prime credit, applies for a loan, they can expect to have a much lower interest rate than an applicant with a poor credit score, or a subprime credit score. In the case of credit cards or other forms of lines of credit, the credit limit will usually be higher for borrowers with high credit scores than for borrowers with lower credit scores. For example, someone with a 700 credit score may apply for a line of credit and receive a $1,000 credit limit on that line of credit, with a small interest rate. On the other hand, someone who applies for the same line of credit with a credit score of 500 may only receive a $500 line of credit, and with a much higher interest rate on the money borrowed when paying the lender back.
For more education on how your credit can affect you, visit our education page on Liftcredit.com!