Understanding Your Credit Scores:
Welcome to an ongoing series on the importance of your credit, building good credit and maintaining good credit. To better understand credit it is important to understand your FICO score.
For over 20 years the FICO scoring system has been a trusted solution for US lenders, to help them in making decisions in offering you the best interest rate loans, rebates, and premium credit cards.
FICO stands for Fair Isaac & Company also known as Fair Isaac Corporation.
"It is important to know that your FICO score is used to estimate your level of future credit risk."
Therefore your credit score influences the credit made available to you, the terms and interest rate, etc., that a lender will offer you. It is a vital part of your credit health.
There are 3 different agencies that report your FICO scores. They are Equifax, Experian, and Trans Union.
FICO score is calculated by a mathematical equation that evaluates many types of information from your credit report. This is done by computing this information and comparing it to patterns of hundreds of thousands of past credit reports.
Your FICO score can range from 300 to 850 points. If your scores show a large variation, it is because they have received different information, but if they receive the same information, your scores will be almost the same on all 3 bureaus.