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What is FICO?
Founded in 1956, FICO uses advanced analytics and mathematics in order to help businesses make better decisions with their lending practices. A credit score is a number that summarizes your credit risk. It is based on a “snapshot” of your credit report at a given point in time. Your credit score helps lenders determine your credit risk. FICO scores are the most widely used score and lenders rely on them to make billions of credit decisions each year.
There are three different FICO scores that are developed by FICO: Equifax, Experian, and Transunion. All three credit-reporting agencies are widely used by lenders. Each of these agencies may have different information about you, so it would be in your best interest to check all three scores and credit reports to check for inaccurate information.
Breaking Down the Score Range:
Your FICO score will range somewhere between 300-850. The closer your credit score is to 850, the better your score and the more favorable you are to lenders.
Your Credit Score and Business Decision Making:
Even though your FICO score seems like the end all be all, it is only one of several factors that a lender will consider in deciding whether to give you credit. Lenders may look at other facts like your overall credit history, employment history, your income and the amount of debt you can handle with your income. As a result, a lender can extend credit to you even though you have a low FICO score, or decline your request for credit even though you have a high FICO score.
Want more information about your credit score? Stay tuned to my blog for tips on how to manage your credit score and succeed with your finances!
-Written by: Café Belle’s Money and Career Barista