What You Should Know About This Year

Credit Score vs FICO: All You Need to Know

Getting approved for a car loan or credit card can be daunting, especially when you hear your lender mention your FICO score or credit score. What are these scores exactly? How do they affect your approval chances? 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.

A credit score is a numerical rating that indicates how likely a person is to repay debt. The higher a person’s score is, the more likely they are to 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 is beneficial to monitor your score. There are three major credit reporting agencies-Equifax, Experian, and TransUnion-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’s scoring model comes in several flavors, each with its own set of formulas for calculating 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!

Each month, you can obtain your FICO score for free from each of the three credit bureaus via your credit report. Fair Isaac Corporation’s FICO scores range from 300 to 850. Most lenders use FICO scores to determine whether or not to make a loan; if your score is too low, you may not be approved at all. Credit scores are used more broadly than FICO scores-credit card companies, landlords, employers and others can also check them-and they’re calculated differently. Your credit score is usually comprised of several different scores from three major reporting agencies: Equifax, Experian and TransUnion. Each agency calculates its own version of your credit score based on information in its records about how you pay your bills, the types of accounts you maintain, and the length of time those accounts have been open. Because each agency’s information is slightly different, it is possible to have a high score with one agency and a low score with another. This website has all you need to learn more about this topic. Check it out!

The most important thing to remember about credit scores is that there is no such thing as a single good or bad number. Lenders establish their own criteria for loan approval; some will approve borrowers with lower credit scores, while others will not lend to anyone with a score below a certain threshold. Rather than obsessing over a single number, examine your credit score report and ensure that everything appears to be in order. Report immediately any inappropriate content or content that does not belong to you so that it can be removed. You should also keep track of where your scores stand over time, so you know if any sudden changes could mean trouble down the road.

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