Credit Scores: How the Range Works and Why It Matters

The standard FICO range at a glance

FICO scores span 300 to 850, commonly grouped as poor, fair, good, very good and exceptional. Each funder draws its own lines.

Funders treat these as a guide. Some will consider a file in the lower bands if revenue is strong. Others will not look below a set cutoff.

What goes into the score

Payment history and amounts owed carry the most weight. Length of history, new accounts and mix of credit make up the rest.

The score is built from five broad areas:

• Payment history: whether you pay on time.
• Amounts owed: especially how much of your revolving limits you use.
• Length of credit history: how long accounts have been open.
• New credit: recent applications and new accounts.
• Credit mix: cards, installment loans and so on.

This is why paying down card balances often lifts a score faster than any other move.

How your score changes the cost of funding

Lower scores generally mean higher rates or factor rates, shorter terms and smaller amounts. The gap can be large over the life of a deal.

Here is an illustrative example. Two owners each take $50,000. One is priced at a 1.20 factor rate, so repayment is $60,000. The other is priced at 1.35, so repayment is $67,500. The $7,500 difference comes from risk pricing alone.

Whether the higher price is worth it depends on what the money produces. If $50,000 of inventory returns $25,000 of profit, the extra cost is tolerable. See what a 1.3 factor rate costs for the math.

Hard pulls versus soft pulls

A soft pull checks your credit without affecting your score. A hard pull is recorded as an inquiry and can lower the score slightly.

Many lenders run a hard inquiry when you formally apply. Several in a short span can add up. Checking your own report or being prequalified is typically a soft pull.

ROI Funder uses a soft credit pull to apply, so you can find out what is available without a score impact. Read more about hard inquiries and how they work.

What to do if your score is lower than you would like

Pay balances down, make every payment on time, correct errors, and avoid new credit before you apply. Improvement takes weeks to months, not days.

1. Get your free reports and dispute errors.
2. Target card utilization below roughly a third of limits.
3. Set up autopay for at least the minimum payments.
4. Hold off on new credit applications.
5. Let accounts age; do not close your oldest ones without a reason.

If you cannot wait, ask what your file looks like with the score you have today. Revenue, deposits and time in business can still carry a lot of weight. Our 7 ways to boost your credit score covers each step in more detail.

What ROI Funder looks at

ROI Funder considers a 500+ FICO, 6+ months in business and $20,000+ monthly revenue, then matches the file to funders in our network.

The score gets you in the door, but the whole file shapes the offer. A complete file is the application plus three months of business bank statements. Approved, complete files can be funded the same business day.

Before you sign, we lay out true cost, payback period and monthly-equivalent payments. That way you see whether the funding earns more than it costs. Compare product types on our funding solutions page, or read credit requirements for a business loan.