If you are buying a home or making a big purchase such as a car, boat, RV, vacation home, etc., you will need to know everything you can about your FICO score? If you are starting out after graduating from school and settling into the workforce and living in an apartment, it is a good idea to educate yourself about how to maintain an excellent credit score and FICO score. Knowing this information and keeping a high FICO score will set you up for a chance at financial success.
The FICO credit score was created by The Fair Isaac Corp. as a way to assess credit risk for lenders, landlords, etc. The FICO credit score looks at your credit history to determine if it’s wise for a company to extend credit to you. A high score indicates a strong credit history, meaning lenders and insurers are more likely to offer credit.
The FICO score is comprised of five main components derived from your credit history:
Your FICO score is not the only credit score available. The big three credit bureaus compile information about your borrowing habits and use this information to create detailed credit reports. Your FICO score is used by lenders to determine your dependability as a borrower.
FICO scores range from 300 to 850.
The three major credit bureaus that report your annual credit report are:
These credit bureaus offer one free credit report a year for you to review. The banks typically provide your FICO score for free.
Paying a bill or credit accounts on time is the most critical factor in determining your FICO score. It shows that you are less of a credit risk.
The higher your credit score is the better interest rate you will receive from a lender.
If you have a lower score than you would like or you are getting turned down by lenders due to your FICO score, you’ll want to do these things to improve your FICO:
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