- Date : 07/08/2023
- Read: 3 mins
FICO score evaluates the creditworthiness of the borrower and lenders use these scores for loan approval and also defining rates for loan.
The FICO score becomes crucial when applying for any mortgage, credit card, or car loan. Lenders use different versions of FICO scores based on what type of credit or loan you want. The FICO credit score ranges from 300 to 850, where higher scores indicate a better consumer credit history. So, boost your FICO Score.
- FICO scores are used by lenders to evaluate the credibility of the borrowers.
The FICO score methodology has undergone several upgrades with lenders using different versions to provide loans.
A good FICO score indicates that you are credible enough to borrow at a lower interest rate and on the most lucrative terms.
What is a FICO score?
FICO stands for Fair Isaac Corporation. The FICO score is like a credit score based on your creditworthiness and credit history. FICO scores allow you to make a comprehensive assessment of your creditworthiness. To derive an accurate score, digital footprints, all spending activities, and social media interactions are considered.
How to use the FICO score for loan approval?
FICO scores quickly evaluate your creditworthiness and potential credit risk associated with loan borrowing. Whenever you apply for a loan or credit, lenders will look at your FICO Score and decide whether to approve your loan. They decide rates, terms, and associated loan conditions based on your FICO score. A good FICO Score usually lies between 700 to 749.
What are the factors that affect FICO scores?
There are three credit bureaus for consumers that generate their credit scores: Experian, TransUnion, and Equifax. The FICO credit score is calculated based on five factors.
Payment history (35%)
Credit history length (15%)
Any new credit (10%)
Owned amount (30%)
Credit mix (10%)
How to check the FICO score?
To check your FICO score, you must be the card's primary account holder. You can check your FICO scores quickly online.
Go to the correct website of your card and log in to the portal.
After logging in, click on the “See your score” option. You can also view your credit report.
Now, fill in the required details like full name, address, birth date, etc., to preview your score.
After verification, you can see your FICO score or report.
FICO scores can be used as a better alternative to credit scores by lenders. It gives a better understanding of the borrower's credibility and helps lenders to approve loans on certain rates and terms. A good score will help you get great loan terms at lower interest rates. With better scores, you will be a more appealing customer to most lenders.
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