If you are over the age of 18 and haven’t been living under a rock for the last decade, then you probably have heard the term FICO Score. Your FICO Score is used by creditors and lenders to determine if you will get approved or denied for a credit card or loan and what type of interest rates they will give you. We would also like to say that your FICO Score could be monitored for other reasons as well. Keep reading to find out more.
How FICO Scores Are Calculated
Your FICO Score can range from 300 to 850 and as you probably know already, having a high score means you’ll have a higher chance of getting approved for a loan or a new credit card. These scores are calculated based on your payment history, amount owed, what types of credit or loans you currently have, and your credit history. However, there could be several other additional factors that could effect your overall score, but Fair Isaac, the company who created the FICO Score, hasn’t came forward publicly with their entire algorithm.
What is Considered a Good FICO Score?
Generally speaking, a FICO Score of 740 and up is considered good and anything over 800 is considered exceptional. Most people will never achieve a credit score that is over 800 and trying to obtain a perfect 850 is considered by some to be borderline impossible. For many people, getting a good FICO score can seem like a monumental task, but living within your means and paying off your creditors on time can help keep your credit rating in good standing.
Is My Credit Score Different From My FICO Score?
Technically speaking, no. Your FICO Score is what many people refer to as your credit score. However, did you know that TransUnion, Experian, and Equifax all give you seperate credit scores. When you are dealing with a creditor and they mention your credit score, be sure to ask them if they are referring to your FICO Score, or your credit score from one of the three major bureaus.
Your FICO Score Could Impact More Than Just Your Credit
Did you know that having a low credit score can impact more than just your ability to get a loan or a new credit card? Many employers now run credit checks on potential new hires to see if they have financial trouble and to determine if the prospective new hire would be a good fit for their company. This is especially true if you are applying for a job such as bank or other financial institution. Your overall credit score can also impact your ability to live in certain areas as well.
Many landlords will also investigate your credit score to try and decide if renting to you would be a good idea or not. By doing this, they are trying to calculate if you would be considered a high risk renter that would be more likely to default on your rental payments.
We hope you enjoyed reading this article about FICO Scores and we also hope that it has eliminated any questions you have about your own FICO Score. If not, feel free to leave us a comment below and we will try to answer any questions you might have. If you would like more important credit repair tips, feel free to check out our post on fixing bad credit, or check back weekly for new content.