FICO score is a type of credit score that is widely used by lenders to evaluate an individual’s creditworthiness. The FICO score is based on a credit report, which contains information about an individual’s credit history, such as their credit accounts, payment history, and outstanding debts.
FICO scores range from 300 to 850, with higher scores indicating a lower credit risk. A score of 720 or above is generally considered to be good, while a score of 660 or above is considered to be fair.
A score below 660, is considered to be poor, and it could make it more difficult to obtain credit or result in higher interest rates.
FICO score is based on five main categories: payment history, credit utilization, length of credit history, new credit, and credit mix. Payment history has the most weight, making up 35% of the score, while credit utilization (30%), length of credit history (15%), new credit (10%), and credit mix (10%) make up the remaining percentage.
FICO score is widely used by lenders, including credit card companies, banks, and auto lenders, to determine whether to approve a loan application and at what interest rate. It’s also used by landlords and employers to evaluate the creditworthiness of potential tenants and employees.
It’s important to check and monitor your FICO score regularly to ensure that the information on your credit report is accurate, and to make sure you are in good shape for obtaining credit in the future.