Or maybe from your prospective landlord, who wants to “check your FICO®” before he’ll let you live in his apartment. Show
But what does FICO® stand for? And why is it so important? What Does FICO® Stand For?Despite sounding mysterious, the acronym’s origins are pretty straightforward: FICO® stands for Fair Isaac Corporation, a financial services company founded in 1956 by an engineer named Bill Fair and a mathematician named Earl Isaac. The pair wanted to use data to help businesses make better decisions. It started using predictive analytics to create “credit scores” that would help businesses determine how much credit risk a potential borrower posed. In 1958, it introduced its first credit scoring system, and in the late ’80s, it rolled out FICO® credit scores. What Are FICO® Scores?FICO isn’t a credit reporting agency. Instead, it uses reports from the three major credit bureaus — Equifax, Experian, and TransUnion — to determine your FICO credit scores. Lenders, in turn, use these scores to assess your level of credit risk: The higher your score, the less likely you are to default on a loan. So, if your FICO® scores are high, lenders will be eager to give you money, and will offer attractive interest rates. If your scores are low, they’ll be more wary, and may deny your application — or offer high interest rates to hedge their risk. Though people often refer to “your FICO® score” in the singular, you actually have dozens. Each is based on a single credit report from one of the credit bureaus. They vary based on:
Though we’re focused on FICO® scores for this article, they’re not the only credit score around. The three major credit bureaus introduced “VantageScore®” back in 2006. The main difference between FICO® and VantageScore® is the latter can be generated using just a month or two of credit history. With FICO® scores, you usually need at least six months of history to generate a score. Most lenders will check your FICO® scores rather than VantageScores. But since they use similar credit scoring models, maintaining good FICO® scores will also lead to good VantageScores. Money TermUltraFICO This score takes into account data provided by consumers, like bank account information. Its aim is to help people with bad or limited credit histories boost their scores. Share Term Email Facebook LinkedIn Reddit Twitter What’s In Your FICO® Scores?Your FICO® scores aren’t set in stone. They change frequently, even from month to month, depending on your credit behavior. Here’s a breakdown of what affects them: What’s In Your Credit Score?This chart shows the criteria used to create FICO® scores and their relative importance in your credit score.
New credit: How many accounts have you opened recently? Opening several lines of credit in a short amount of time can say “credit risk!” to lenders. Never used credit before? Then you probably don’t have FICO® scores. FICO® typically requires you to have six months of payment history before it’ll be able to generate your scores. Here’s how to build your credit file with credit cards. What’s a Good FICO® Score?Here are the FICO® score ranges for FICO® Score 8, according to myFICO. FICO® Score RangeCredit Rating579 or lowerPoor580–669Fair670–739Good740–799Very Good800 or aboveExceptionalOnce you get into the upper end of the “Good” range, you can expect to be approved for most offers you apply for, although you won’t always get the best possible rates. While there isn’t a special prize for having credit scores above 800 or a perfect score of 850, a high score can provide a nice cushion in case your score falls. You should also be aware that credit card issuers base approval decisions on more than just one of your credit scores. Even if you have great FICO® scores, for example, a financial institution may deny you for certain items on your credit reports or your income. Where To Check Your FICO® Scores for FreeNow that you know what FICO® stands for, you’re probably eager to see your scores. The easiest way to view a free FICO® score is through the Discover® Credit Scorecard. This tool is available to anyone, whether you have a Discover® credit card or not. Discover® cardholders will see FICO® scores based on their TransUnion® reports, while non-cardholders will see scores based on their Experian™ reports. Money HackCheck Your Credit Reports Be sure to check your credit reports often. FICO® bases your scores on these reports, so if you find mistakes or errors, contact the credit bureau immediately. Share Hack Email Facebook LinkedIn Reddit Twitter Why Your FICO® Scores MatterThough credit scores might not seem like an exciting topic, they’re extraordinarily important for your financial well-being. And FICO® scores, in particular, matter: 90% of “top lenders” use them to make lending decisions. Those lending decisions go beyond whether or not you’ll receive a shiny new credit card. They affect all areas of your life, including your ability to get a job or an apartment, and the interest rates you’ll pay on an auto loan or mortgage. So it’s vital you stay on top of your scores. If you want to improve your FICO® scores, here are a few steps you should follow:
When you have excellent FICO® scores, you can snag the best interest rates and the best credit cards. When you have bad credit scores, you may have trouble getting a landlord to lease you an apartment. So, if you think about it, FICO® stands for much more than just a credit score — it stands for financial opportunity. In Case You Missed ItTake-aways
Email Facebook LinkedIn Reddit Twitter You Should Also Check Out…What Credit Score Do You Need To Buy A House? Launch Link How Do Tax Liens Affect Your Credit Score? Read More How Many Types of Accounts Should I Have on My Credit Reports? Read More How To Check Your Free FICO® Score (and Every Other Free Credit Score) In Under 5 Minutes Read MoreBy Susan Shain Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker. What does FICO stand for in slang?Noun. fico m (plural fichi) fig (fresh fruit and tree) (slang) cool guy, bit of alright.
What is FICO another name for?Primary tabs. FICO is the acronym for Fair Isaac Corporation, as well as the name for the credit scoring model that Fair Isaac Corporation developed. A FICO credit score is a tool used by many lenders to determine if a person qualifies for a credit card, mortgage, or other loan.
What is a good FICO credit score?There are "base" FICO® Scores that the company makes for lenders in multiple industries to use, as well as industry-specific credit scores for credit card issuers and auto lenders. The base FICO® Scores range from 300 to 850, and FICO defines the "good" range as 670 to 739.
What is FICO score in simple words?A FICO score is the number used to determine someone's creditworthiness, your credit score. Financial institutions and lenders use this as a guide to determine how much credit they can offer a borrower and at what interest rate. FICO scores can range from 300 to 850, the higher the number the better.
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