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FICO Scores: What are they?

Writer and editor - Lauren Ward | Updated on 2018-08-21 |

Credit ratings have a huge impact on the amount of credit and interest rates being offered by lenders. It’s an essential element of credit health. When clients pose any credit applications, lenders will want to clearly understand all risks they would face by lending their money. Upon ordering credit reports, lenders could as well obtain credit scores relating to the documented report. Credit scores are numbers that review potential credit risks.

For a annual free credit report, visit You can see your credit score at MyFICO.

What Does My FICO Score Entail?
These form of credit scores were devised by the renowned Fair Isaac Corporation. About ninety percent of prominent lenders utilize FICO scores to make substantive decisions on credit-oriented issues. These scores are usually calculated from diversified credit data info fragments featured in the credit report.

Collected data is then grouped into five distinct categories which include:

  • Payment history
  • Debt amount
  • Credit history time-span
  • Available credit mix
  • New credit records

Through careful evaluations, involving keen comparisons between this information and past credit records, FICO scores approximate your prospective credit risk intensities.

What’s an Excellent FICO Score?
FICO Scores cover a score range between 300 and 850. A greater score implies lesser risks while a lower score indicates higher risks. However, these scores don’t speak so much about the client’s nature. A bad score doesn’t necessarily mean that the customer is unreliable.

While most lenders rely on FICO scores to decide on lending agendas, each lender owns specific lending strategies. There are no standard credit scores for all lenders. And apart from FICO Scores, many other factors are taken into consideration while evaluating actual interest charges.

Essential Details for Calculating your FICO Score
Whenever the credit agency calculates a credit score from your credit record, you’ll be supplied with adequate reasons that hugely influenced that picky score. And most often, these reasons tend to be negative since they outline possible causes of the low credit score.

In order for your FICO Score to be determined, the reference credit report should contain detailed information that’s both reliable and up to date. This means that you should own an account that has been active for at least six months and at one point should have been reported to a credit agency within the past 6 months.

FICO Scores for all Agencies
You’ll have unique scores for three credit agencies: Experian, Equifax, and Trans-Union. These FICO Scores depend solely on the information that each agency documents about you.

Each bureau considers only those details that are available in their own files without really having to outsource any further information. In case the resultant credit scores differ, then it could possibly be a result of varying credit reports. If it happens that the three agencies have identical reports, then most probably the obtainable FICO Scores will bear a close resemblance.

When changes occur on your credit information, your credit score will also change accordingly. Hence, your last month’s FICO Scores are totally different from what lenders would obtain from the credit agency today.

Lauren Ward

Lauren Ward
Writer and editor

Specializing in original, well-researched web content, including blog posts, news articles and web copy. Areas of expertise include personal finance and lending. 10 years of experience as freelance writer and working at Federal Reserve Bank of Richmond.
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