FICO stands for Fair
Isaac Corporation, the developer of modern credit scoring models. Fair Isaac
Corporation began its pioneering work in the late 1950s and its scores have
become widely accepted by lenders as a reliable means of credit evaluation. All
3 credit bureaus use scoring systems that are based on FICO models.
What is My FICO Score?
FICO scores are the
credit scores most lenders use to determine their risk in lending to you. Your
scores are computed from many different bits of data in your credit report -
including payment history and outstanding balances. FICO scores range from 349
to 849, with higher scores indicating better credit histories. The current
median FICO score in the United States is 723.
The best scores get
the best credit card interest rates, loan terms, even insurance premiums. The
difference between a good credit score and a so-so score might mean hundreds of
dollars in costs every month.
How FICO Works
Whenever you're
applying for a credit card, mortgage or loan, most lenders will check your FICO
scores to get an accurate assessment of your creditworthiness. FICO scores are
available to lenders and merchants on a subscription basis. You are also
entitled to purchase your scores.
How to Increase FICO Score
Here's the beauty of
FICO. Since recent payment patterns have a greater bearing on your FICO scores
than past credit history, your FICO score will most likely increase if you show
a consistent payment pattern within the last 6 months. So keep to a payment
schedule and show that you have the ability to be responsible in credit matters.
You'll see your FICO score rise.
