How Lenders See You

 A majority of lenders use FICO scores as one method to estimate an applicant's credit risk. People with high FICO scores are likely to repay loans and credit cards more consistently than people with low FICO scores. Although FICO scores are remarkably predictive, no one can predict with certainty whether or not an applicant will repay a credit account.

As a group, the consumers in your score range, 500-549, have a delinquency rate of 71%, as illustrated in the graph. This means that for every 100 borrowers in this range, approximately 71 will default on a loan, file for bankruptcy, or fall 90 days past due on at least one credit account in the next two years.

Most lenders would consider consumers in this score range as very high risk.

Understanding the graph: This chart demonstrates the delinquency rate (or credit risk) associated with selected ranges of the FICO score. In this illustration, the delinquency rate is the percentage of borrowers who reach 90 days past due or worse (such as bankruptcy or account charge-off) on any credit account over a two-year period. The graph clearly illustrates the predictive power of the FICO scores, which is why lenders rely on them for credit decisions.