WHAT IS A FICO SCORE
Your FICO score is a three digit number derived by the credit reporting agencies and is based on your credit history. It is the most impacting factor when determining whether or not you will be approved for any type of credit or loan as well as what kind of interest rates and terms you are going to receive. In addition, your FICO score can even determine whether or not you get that new job, cell phone, or apartment.
Almost everything you do financially is going to influence your FICO score. If you take care of your credit score, you will likely obtain favorable interest rates and terms. If you have a low credit score as a result of bad credit practices, you can expect higher rates and even recurrent loan and credit rejections.
We recommend that you
obtain a copy of your credit report regularly to ensure
accuracy. If there is inaccurate information, you will need to take the
proper steps to
credit reports. Some erroneous data is going to be more
difficult to remove than other info. Learn more about what the
hardest items to fix are.
Why do businesses use FICO scores?
Your FICO score can also be used to determine whether or not you are a favorable candidate for a job you are applying for or if you will be a positive tenant for a new apartment you are interested in. Nowadays, there are many different scenarios that will rely on your FICO score.
As mentioned, a high FICO score will translate into a positive
reputation with businesses and creditors. A low FICO score means
that you are a risk, resulting in companies not wanting to do
business with you.
The formula used to derive your FICO score is calculated by the
subsequent 5 categories:
Examples of how FICO effects interest rates:
On a five-year auto loan it can mean up to a 10 point difference on your interest rate.
On a five-year unsecured loan it can mean up to a 15 point difference on your interest rate.
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