Credit score is one of the most looked into figure by the lenders before allowing credit to a person. Credit score also play a huge role in influencing the amount and the rate of interest at which you get a loan. When a person applies for a credit card or any other credit facilities, the lenders want to know the risk they are taking by giving you credit by evaluating your financial history. Lenders order for your credit report which would contain all the information about your previous financial transactions. Credit score is entirely based on the information in the report. A credit score is a number which summarizes the information in the report. A credit score is a number which is easier for the lenders to understand the position of the applicant. Credit scores are also known as FICO scores as most of the credit scores are calculated using the software developed by the company FICO (Fair Isaac and Company). Most of the companies in the lending industry use FICO scores for evaluating their clients. FICO scores have different names in different credit reporting agencies. There are three prominent credit reporting agencies namely: Experian, TransUnion and Equifax.
FICO credit score have a range between 300 and 850. The higher the score show the lower is the risk for the lender while providing you with the necessary credit. A person with a high FICO score can also get a less interest rate which ultimately helps the person save a lot of money.
Advantages of FICOtm Score
- Faster Loans: One of the greatest use or advantage of FICO score is the faster availability of credit from lenders as they can know about your credit status just by analyzing the FICO score which reflects and includes all your financial past.
- Credit Decisions: FICO score helps the lender to quickly analyze the credit position of the applicant by analyzing the FICO score which reflects the credit eligibility if the individual. This eliminates the room for personal bias while lending loans.
- Older Credit problems: Another specialty of FICO score is that it does not allow old credit defaults prevent you from getting a credit. As the time progresses and if a person has improved in handling his finances well it will be reflected as time passes. FICO score is more inclined to a relatively shorter time frame to analyze your financial performance. This helps an individual to improve his credit score.