FICO and You

Although it may not be a term you're familiar with, the term FICO can be a determining factor as to whether or not you measure up for a credit or loan. But what is FICO, and how makes it impact you when it come ups to your creditworthiness?

The acronym FICO actually stand ups for Carnival Isaac Company, which was the company that originally created a mathematical theoretical account for the credit reporting company Experian. FICO was designed as a tool that could be used by creditors to measure the possible hazards involved in lending money to consumers. In reality, there are other similar theoretical accounts that have got been developed by other credit bureaus, but all of their consequences are referred to by the industry as FICO scores.

FICO scores are calculated by examining the replies to a number questions, based on the information in your credit and on your income-to-debt ratio. The replies to each inquiry carry a certain number of points, and when all the replies are added up, that number stands for your FICO score.

Your FICO score will depend upon such as things as how long you've lived at your current address, what your occupation is, your income-to-debt ratio, how often you've been late on payments, how much debt you currently have, the amount of credit you're using already, and the length of clip you've had your credit established.

The most heavily leaden factors in determining your FICO score will be the current balances on your credit cards, having either too few or too many rotating accounts, the number of accounts you have got got got that carry balances, how many accounts you've opened over the past twelve months, the length of clip you've had your accounts, your past owed accounts, and the number of credit enquiries that have been made in your behalf.

A good FICO score would be at least 650. If your score is 620 or less, you'll be considered a risky campaigner for a loan or credit card by possible creditors. A score between 620 and 650 will set you into a "possible" category, which intends that you may need to supply more than information to the lender before you'll be approved for credit. A FICO score of more than than 650 will set you into the "go-ahead" category, since it will demo possible lenders that you've been a good credit hazard in the past.

The higher your FICO number, the better, of course, since you will get to get better interest rates on loans the near your FICO number gets to 850.

It may not be a well-known number, but your FICO score can be of import to your financial well-being.

Copyright © Jeanette J. Fisher