The Importance of a Good FICO Score

The FICO score is credit score developed by Fair Isaac Corp. It is a scoring method that determines the credit worthiness of the credit user. In simple words, the FICO Score let’s the lenders assess, “how capable are you to pay off your credit?” The FICO Score is looked at by almost all in the lending industry. If you are in the market to purchase a house or car, you score will be checked.

The FICO score was established to aid the three major credit bureaus, Equifax, Experian, and Trans Union. The FICO Score is arrived at by using a computer model. The model compares your credit history with the other thousands of customers.

You can get a score ranging between 300 to 900 points, higher scores lead to a better FICO Score and, in turn, better chances for you to get the credit under discussion. It's very hard to say what a "good" or "bad" score is. In view of the fact that lenders have diverse standards for how much risk they will undertake. The lender will also assess your current income, assets owned, and current employment. The FICO score is only one aspect of your loan evaluation.

The FICO score is checked when you apply for the credit and varies based over time. Since credit bureaus only calculate your score at the lender's request, it will be established on the information in your file at that specific credit bureau, at that specific time only. It tells the score depending up on your current credit status, and takes into reference past credit history.

To put it in simple language, the FICO score will be arrived at after looking into the status and number of credit cards, balances owed, mortgage, installment loans, late payments, delinquencies, and bankruptcies.