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What is a good FICO score? The answer depends on who you ask. Lenders use your score to predict how likely you will default on a loan. When determining the maximum amount of money you are allowed to borrow for a car or home mortgage, the lender will look at your score.

Most people have good credit histories. They usually have only a few short credit accounts that are paid on time. Typically, those with fewer than two negative credit accounts will receive a score of 720. Anything lower than that may negatively impact your ability to get approved for a new mortgage, new car loans, and even new student loans. Some lenders will consider you to be too risky to lend money if your score is lower than their minimum limit.

People with shorter credit histories tend to have higher FICO scores because they pay their bills on time. But sometimes bad things happen to good people. Sometimes a bad item appears on your credit report for one reason or another and causes your score to drop. That does not mean that you should give up trying to improve your score; it simply means that you need to know why your scores were lowered in the first place.

There are several common reasons that your credit score could be lowered. One is the timing of your payment history. If you have several new credit accounts each month and make all your payments on time, lenders will view you as less of a risk than if you only have one account, have late payments, and miss some payments. Your lender will then reduce your score for that reason.

The length of time that you have had your new credit accounts is also a factor. Lenders look at the average length of time that consumers have held their current accounts. If you have been paying your bills on time for five years but have just opened your second account, your score will be lower than someone who has just opened a new credit card. Your score will drop 10 points for having a longer waiting period. Lenders also look at the amount of available credit that you have compared to how long you have held your existing accounts. If you have plenty of available credit and are constantly spending more than you have put aside, your score will drop.

Having a good FICO score allows you to get better offers on loans and can lower your interest rates as well. If you have a low FICO score, you may even qualify for lower interest rates than you would if you had a good FICO score. You can learn more about your credit history and ways to improve it by registering for a free credit score report. This will give you important information about your score and help you find out what lenders are offering.