About Your Fico Score

By: S. Michael Windsor

About Your FICO Score

Your FICO score is the number which determines your ability to pay back an amount of money in a loan without risk of default. This score is calculated using several different factors which all have a large impact on your credit. The faster you learn what these areas are, the more help you will have on improving any negative marks on your credit report and score.

The FICO score is actually an acronym for Fair Isaac Co and is used not just by banks and lenders, but also by landlords and even potential employers. The outcome of your credit score can and will affect your chances of getting a car, insurance, job, home and more which in turn will affect what your required down payment amount will be along with interest rates charged as well as the need for more information on you such as income statements and verification.

Your FICO score is based on the data derived from five different areas in your financial records. These areas are your payment history, types of credit used, length of time you have been paying off revolving debts, the amounts you owe, and any new lines of credit which you have currently applied for or opened.

Even though credit scores are widely used, there are three consumer credit reporting companies currently available to provide consumers with their FICO credit scores. Experian, Equifax and TransUnion all provide the credit scores using numbers which appear as very different from the other, but they all base their data on the same information about the individual being reported on. There are three different scoring methods that the credit reporting companies use in order to determine a fair number which are based on the needs for auto loans, mortgage loans, and consumer loans.

Credit scores can provide much needed information about an individual in order to expedite many processes which would normally take a lot longer to check into when considering loans, insurance, employment and more. FICO scores may be low for many individuals at times, but the good thing about your credit score is that they can always be improved over time through proper usage and regular monitoring of your credit.

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