What Research About Can Teach You
A Comprehensive Guide: FICO vs Credit Score
Acceptance for a car loan or credit card can be intimidating, especially if your lender mentions your FICO score or credit score. What are these scores? How do they affect your ability to get approved? In this guide, we compare the two most popular credit scores in the United States and explain how they work and why they are used.
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A credit score is a numerical rating that indicates a person’s likelihood of repaying debt. The higher a person’s credit score, the more likely it is that they will repay their debts in full and on time. A good credit score opens the door to low-interest loans and high credit limits, so it’s important to monitor your score. Equifax, Experian, and TransUnion are the three major credit reporting agencies that calculate scores based on information in a consumer’s credit report. However, only one company-Fair Isaac Corporation (FICO)-calculates scores used by lenders. FICO has multiple versions of its scoring model, each of which uses a unique formula to calculate a score. But all FICO models rely on five factors: payment history, amounts owed, length of credit history, new credit accounts opened, and types of credit used. This page has all the info you need. Check it out!
You can receive your FICO score from each of three credit bureaus each month for free through your credit report. FICO scores (used by Fair Isaac Corporation) range between 300 and 850 (100 is average). Most lenders use FICO scores as an indicator for whether to give a loan; if your score is too low, you might not get approved at all. Credit scores are utilized more broadly than FICO scores-landlords, employers, and credit card companies can all check them-and are calculated differently. Your credit score is usually comprised of several different scores from three major reporting agencies: Equifax, Experian and TransUnion. Each agency computes its own version of your score based on information in their records about how you pay bills, what types of accounts you have open, and how long those accounts have been open. Because each agency has slightly different information, it’s possible to have one high score with one agency and another high score with another. View here for more info.
When reviewing credit scores, it is crucial to remember that there is no single good or bad number. Lenders set their own loan approval criteria; some will approve borrowers with lower credit scores, while others will not touch anyone below a certain threshold. So, rather than obsessing over a single number, take your credit score report and make sure everything looks correct. Report immediately any inappropriate content or content that does not belong to you so that it can be removed. You should also monitor your scores over time so that you are aware of any sudden changes that could spell trouble in the future.
This post topic: Financial
