FICO scores are the most commonly used scores by lenders in the United States. These scores are used to measure your credit worthiness. It is a number that predicts your likeliness of paying back a debt/loan. FICO scores are calculated based on facts stated in your credit reports at the 3 main credit bureau’s. Those are equifax, transunion and experian. Each bureau has a different score depending on the facts stated within your credit reports.
For those of you who are new to the credit world there is a very good chance that you do not have any credit at all. If you are unfortunate enough to use credit, having no credit can often be considered as bad as having bad credit. My hope is that you live without credit and use cash instead but that isn’t why this section was created.
FICO scores change constantly as new information is placed in your credit report by reporting agencies. Scores usually range from 300 – 850 and the higher the score you have the more likely you are to pay back a debt. Lower Scores mean higher risks for the lender and may lead to loans or credit being declined.
Scores decrease lending rates and allow lenders to lend you more money. Scores can make the application process significantly easier. In the next blog post I will discuss what your score is made up of, and talk a lot about credit reports in general. Other topics to be discussed in the near future are Identify Theft, Credit Disputes, and with any luck some websites that can help you manage your credit and your identity.