REJECTED (Mismatched Info) – Lesson 2.2.1: What is a FICO Score?

FICO Score is a crucial tool that lenders use to evaluate creditworthiness. It is a three-digit number that summarizes the information in your credit reports. FICO Score helps lenders determine how likely you are to repay a loan, and this information affects how much you can borrow, the length of the loan term, and the interest rate charged. It measures the length of your credit history, the amount of credit you have, how much of your available credit is being used, and whether you have a history of making timely payments.

The Fair Isaac Corporation (FICO) created the FICO Score 30 years ago to provide a standardized way to score creditworthiness that was fair to both lenders and consumers. Before FICO Score, there were many different scores, all with different ways of being calculated, including factors like gender and political affiliation. FICO Score has become the industry standard for evaluating creditworthiness, and it is used by 90% of the top lenders.

A good FICO Score can save you thousands of dollars in interest and fees. It also provides fair and fast access to credit when you need it. By paying bills on time, avoiding carrying too much debt, and making smart credit choices, you can influence your FICO Score. FICO Scores are continually changing because the information in your credit reports is continuously updated. A score above 670 is generally considered good creditworthiness by many lenders, and the higher your score, the lower the risk and the more likely creditors are to lend to you.

Now that you understand the importance of the FICO Score, in the next lesson, we will explore the FICO Liquid Credit Decision Engine and its pivotal role in establishing and enhancing business credit.