What Does FICO Mean To You?

Authored By: Jeanette Fisher

Although it may not be a term you're familiar with, the term FICO can be a determining factor as to whether or not you qualify for a credit or loan. But what is FICO, and how does it affect you when it comes to your creditworthiness?

The acronym FICO actually stands for Fair Isaac Company, which was the company that originally created a mathematical model for the credit reporting company Experian. FICO was designed as a tool that could be used by creditors to evaluate the potential risks involved in lending money to consumers. In reality, there are other similar models that have been developed by other credit bureaus, but all of their results are referred to by the industry as FICO scores.

FICO scores are calculated by examining the answers to a number questions, based on the information in your credit and on your income-to-debt ratio. The answers to each question carry a certain number of points, and when all the answers are added up, that number represents your FICO score.

Your FICO score will depend upon such things as how long you've lived at your current address, what your job is, your income-to-debt ratio, how often you've been late on payments, how much debt you currently have, the amount of credit you're using already, and the length of time you've had your credit established.

The most heavily weighted factors in determining your FICO score will be the current balances on your credit cards, having either too few or too many revolving accounts, the number of accounts you have that carry balances, how many accounts you've opened over the past twelve months, the length of time you've had your accounts, your past due accounts, and the number of credit inquiries that have been made in your behalf.

A good FICO score would be at least 650. If your score is 620 or less, you'll be considered a risky candidate for a loan or credit card by potential creditors. A score between 620 and 650 will put you into a "possible" category, which means that you may need to provide more information to the lender before you'll be approved for credit. A FICO score of more than 650 will put you into the "go-ahead" category, since it will show potential lenders that you've been a good credit risk in the past.

The higher your FICO number, the better, of course, since you will begin to get better interest rates on loans the closer your FICO number gets to 850.

It may not be a well-known number, but your FICO score can be important to your financial well-being.

Copyright © Jeanette J. Fisher

Jeanette Fisher teaches six ways to build credit. Free credit ebook "Credit Tips for Mortgage Financing" worryfreecredit.com

Article Source: http://www.FinanceNook.com
Your One-Stop Quality Finance Article Source

Home | Credit | Credit Score

Read Additional Related Articles from the Credit Score Category

Listed below are more articles related to the above article.

People interested in the above article "What Does FICO Mean To You?" are also interested in the related articles listed below:

Credit Scores: How Are They Calculated? - By : Ed Vegliante
Home Loans – Factors Used To Determine Your Credit Score - By : Dan Lewis
More Your Credit Score, Less You Have To Pay - By : James Taylor
Bad Credit : Understanding The Basics - By : Joe Kenny
Credit Score Improves by Paying on Time - By : Charles Essmeier
Tips To Avoid Gaining A Bad Credit Rating With Your Mortgage - By : Joseph Kenny
How Credit Card Balance Transfers Can Affect Your Credit Score - By : Jake Rustenhoven
How To Improve A Low Credit Score - By : Jake Rustenhoven
How To Get Your Credit Score For Free - By : Stu Pearson
Think Credit Scores Do Not Apply To Young Adults? Think Again - By : Pete Glocker

Read more related articles in Home | Credit | Credit Score

Return Home

FinanceNook.com Home

Featured Sites

Internet Marketing
Website marketing strategies and tips for promoting a business online

Small Business Marketing
How to get more customers or clients than you ever dreamed possible

Social Bookmarking

Bookmark on del.icio.us

Popular Articles

RSS Feeds

FinanceNook.com Home | Top of Page

United States of America . United Kingdom . Canada . Afghanistan . Albania . Algeria . American Samoa . Andorra . Angola . Anguilla . Antarctica . Antigua & Barbuda . Argentina . Armenia . Aruba . Australia . Austria . Azerbaijan . Bahamas . Bahrain . Bangladesh . Barbados . Belarus . Belgium . Belize . Benin . Bermuda . Bhutan . Bolivia . Bosnia-Herzegovina . Botswana . Brazil . British Virgin Islands . Brunei Darrusalam. Bulgaria . Burkina Faso . Burundi . Cambodia . Cameroon . Cape Verde . Cayman Islands . Central African Republic . Chad . Chile . China . Colombia . Comoros . Congo . Congo (Dem. Rep.) . Cook Islands . Costa Rica . Côte d'Ivoire . Croatia . Cuba . Cyprus . Czech Republic . Denmark . Djibouti . Dominica . Dominican Republic . East Timor . Ecuador . Egypt . El Salvador . Equatorial Guinea . Eritrea . Estonia . Ethiopia . Falkland Islands and Dependencies . Faroe Islands . Fiji . Finland . France . French Guiana . French Polynesia . Gabon . Gambia . Georgia . Germany . Ghana . Gibraltar . Greece . Greenland . Grenada . Guadeloupe . Guam . Guatemala . Guinea . Guinea Bissau . Guyana . Haiti . Honduras . Hong Kong . Hungary . Iceland . India . Indonesia . Iran . Iraq . Ireland . Isle Of Man . Israel . Italy . Ivory Coast . Jamaica . Japan . Jordan . Kazakhstan . Kenya . Kiribati . Korea (North) . Korea (South) . Kuwait . Kyrgyzstan . Laos . Latvia . Lebanon . Lesotho . Liberia . Libya . Liechtenstein . Lithuania . Luxembourg . Macau . Macedonia . Madagascar . Malawi . Malaysia . Maldives . Mali . Malta . Marshall Islands . Martinique . Mauritania . Mauritius . Mexico . Micronesia (Federated States) . Moldova . Monaco . Mongolia . Morocco . Mozambique . Myanmar (Burma) . Namibia . Nauru . Nepal . Netherlands . Netherlands Antilles . New Caledonia . New Zealand . Nicaragua . Niger . Nigeria . Niue . Norfolk Island . Northern Mariana Islands . Norway . Oman . Pakistan . Palau . Palestine . Panama . Papua New Guinea . Paraguay . Peru . Philippines . Poland . Portugal . Puerto Rico . Qatar . Reunion . Romania . Russia . Rwanda . Sahara . Saint Helena . Saint Kitts and Nevis . Saint Lucia . Saint Pierre & Miquelon . Saint Vincent & The Grenadines . Samoa . San Marino . São Tomé & Príncipe . Saudi Arabia . Senegal . Serbia . Seychelles . Sierra Leone . Singapore . Slovakia . Slovenia . Solomon Islands . Somalia . South Africa . Spain . Sri Lanka . Sudan . Suriname . Swaziland . Sweden . Switzerland . Syria . Taiwan . Tajikistan . Tanzania . Thailand . Togo . Tongo . Trinidad & Tobago . Tunisia . Turkey . Turkmenistan . Tuvalu . Uganda . Ukraine . United Arab Emirates . Uruguay . Uzbekistan . Vanuatu . Vatican City (Holy See) . Venezuela . Vietnam . Yemen . Zaire . Zambia . Zimbabwe

Template Design by Larry Lim | Powered by Article Dashboard