What´s A FICO Score?

A credit score is a number lenders use to determine the risk of lending someone money. A person’s credit score is one way banks, and other institutions, evaluate the likeliness that the person can or will be able to pay off any debts they collect. A higher credit score indicates that the person’s current financial circumstances and their historical behavior demonstrate their accuracy to pay off any loans they may be approved for. In the United States, the most common credit scoring system is the FICO score. This is a score used by the major credit agencies to rate someone’s creditworthiness. A FICO score will refer to as Credit Level or Credit Quality. Poor, Fair/Average, Good or Excellent are the ranges of FICO scores. A Poor credit score is under 630, a
Someone’s credit score can have an effect on them in two ways. Whether they can get approved for a financial product, and what interest rates they may have to pay. The higher their FICO score is the more likelihood of them getting approved for a credit card or loan is. This will usually reduce the interest rate related with that loan or card. Lower scores may cause someone to be ineligible for a product or service completely and cause their interest rates rise.
A person’s FICO score is broken up into major factors. 35% is their Payment History, 30% is their Debt Burden, 15% is their Length of History, 10% is the Types of Credit the person uses, and 10% is their Recent Credit Searches. A person’s payment history is the largest component of their FICO score. If a person’s payment history is marked with negative information, it would indicate that the person often has trouble meeting their debt responsibility. It could either be that the person forgot about the payment, or they have trouble keeping up with the payments. The other major component of someone’s credit score is the break up of their existing debt