Your FICO score is a 3-digit number that you receive based on your credit report. The number helps the lenders in deciding the possibility of you returning a loan. It also affects the amount you can borrow, the number of months you get for repayment, and how much this loan is going to cost in terms of interest rate. After you have applied for credit with a lender, they require a quick and consistent method for determining whether to lend you the money. In almost all cases, these lenders will consider your FICO score.
Basics of a FICO score
You may consider the FICO score to be the summary of a credit report. It will measure how long you had credit, how much credit you possess, and what is the available credit limit. It will also consider whether you are paying the repayment on time. The FICO score allows lenders to make faster and smarter decisions about who to loan the money to. It is also helpful for people to get quick and fair access to credit when it is needed. As the FICO scores are calculated depending on the credit info, it is in your hands to influence your score if you are paying the bills on time. It will also help if you are not carrying a large amount of debt and you are making intelligent credit choices.
The arrival of the FICO score
FICO or Fair Isaac Corporation introduced the FICO score almost thirty years ago for providing an industry-standard to score the trustworthiness of a borrower. The score is fair to both consumers and lenders. There were several different scores in existence before the arrival of a FICO score and all of them had different ways of calculating credibility. Some of them even considered political affiliation and gender.
Significance of FICO scores
There are millions of people benefitting from the FICO scores. It allows them to gain access to a credit they require for doing things such as getting an education, covering medical expenses, and buying their first homes. Some of the utility and insurance companies will also consider the FICO score while setting up their terms of service. The fact remains that having a good FICO score can save thousands of dollars in fees and interest. This is because most lenders will extend a lower interest rate when you appear to be a lesser risk to them.
Overall, the FICO scores are fast, consistent, predictive, and fair scores that help in keeping the cost of credit lower for the whole population. If the credit is more accessible, more lenders can lend the money and they are more efficient in their procedures. All this results in driving down the costs and passing on the savings to the borrowers.
Difference between other credit scores and a FICO score
Fair Isaac Corporation is only responsible for creating the FICO scores. These FICO scores are utilized by more than 90% of the top lenders when they are making their lending decisions. The reason? This is because FICO scores are industry standards while making fair and accurate decisions related to creditworthiness. FICO scores help thousands of people in getting the credit they require for new cars, homes, or other special buying. You might have seen advertisements for some other kinds of credit scores. You may have even bought some of them in the past. But these credit scores evaluate your score differently from the FICO score. Therefore, as the other scores may appear similar to the FICO scores they are not.
Different lenders decide what a good FICO score is for themselves. They also use this FICO score differently together with their loan approval process. Generally speaking, most lenders find a FICO score above 670 to be having good creditworthiness. Usually, the higher you score, the lesser is the risk involved and there are more chances of creditors extending a loan to you. The general score ranges established by various creditors allow them to make their lending decisions. They also act as targets for you to achieve. If you live in Clearwater, FL, or Pinellas County, and you are looking for in-depth information about FICO and your credit scores, get in touch with Super Credit Repair for an expert opinion.
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