What is a FICO score?
A FICO score is a generic term for credit agencies to the score derived from the FICO statistical model. It measures the relative degree of risk a potential borrower represents to the lender or investor. FICO scores vary from about 375 to 900 points. If you score at least 680, you are considered ‘A’ credit or have ‘Excellent’ credit.
-A FICO score is a credit scoring method to determine the likelihood of credit users paying their bills. A credit score attempts to condense your credit history into a single number. Credit scores are based on the following: • Any late payments to creditors • The amount of time your credit has been established • The amount of credit you’ve used as opposed to the amount of credit still available • The length of time you’ve been at your present residence • Your employment history • Any negative credit information: bankruptcies, charge-offs, collections, liens, etc.
The FICO score, also known as the credit score, is determined by five factors: types of credit in use, payment history, amounts owed, length of credit history, and new credit. Types of Credit in Use: In general, a person’s credit score will be higher with a more diverse mix of credit in their credit history but this is not always the case. Payment History: If a person has an overall good payment history, then this will positively impact his credit, or FICO, score. Perfect payment history is not necessary. Amounts Owed: The lower a person’s balances are generally kept, the better this determinant will affect his FICO score since higher balances may indicate that a person is overextended in credit. Length of Credit History: More established credit users tend to have a more favorable credit score than do newer credit users. New Credit: The credit user opening too many new credit accounts in a short period of time is seen as more of a risk due to the multiple credit requirements he is incu
The FICO score is a numeric snapshot of your credit risk picture at a particular point in time. The score is taken from an analysis of your credit bureau report. It does not consider your gender, race, nationality or marital status. It was developed by the Fair, Isaac Company to assist lenders in evaluating how likely you are to repay your loan in a timely manner. The company uses a proprietary formula to compare your credit history with a nationwide database of millions of borrowers. The result is a score from between 350 and 850 with 700 or higher being generally considered a “good” credit risk. As a general rule, your FICO score is composed of five factors from your credit report: • Payment History • Amounts Owed • Length of Payment History • New Credit • Types of Credit in Use Your payment history is your track record. Obviously, this includes how often you have made your past payments on time. Other components of this factor include any public record collection items (bankruptcy,
