What powers your FICO score?
If you have borrowed money from any bank or finance company in the US, you must have heard the term FICO score. FICO is created by Fair Isaac Corporation to score the rising debt levels of U.S. consumers. It is a three-digit number that helps lenders determine how likely borrowers can repay their loan amount. It has a range between 300 and 850.
Your FICO Score decides how much lenders are willing to pay you and at what rate of interest.
What does FICO Score indicate?
FICO Score acts as a helping hand for lenders to decide whether or not to lend you money. Your credit information plays a vital role to find out the summary of your credit report. FICO Score helps various borrowers to get fair and fast credit access that they need to buy credit cards, automobiles, and various other goods and services on loan.
What is a good FICO Score?
If your borrower is paying his/her installments along with interest on time, it helps in improving FICO Score and inclines you towards good creditworthiness.
The higher your score, the more creditors will be interested to lend credibility to you.
Let’s take a look at a good FICO Score chart to check your creditworthiness –
Main factors that affect your FICO Score:
Previous Payment Record (35%) – To track the previous record if you as a borrower can repay the loan on time.
Amounts owed (30%) – It encompasses how much of your available credit you are putting into use. It is better to keep it low, not zero.
Length of Credit History (15%) – To check how responsibly you manage the borrowed money and for how long.
Newly Borrowed Credit (10%) – It is better to keep yourself low-key when it comes to borrowing credit. Opening many credit accounts in a short interval can be riskier for your credit history.
Types of Credit in Use (10%) – It considers the mix of various types of credit that you use. For instance – Installment Loans and revolving credit. If you don’t have, opening them in a short period can lower your FICO score.
In a nutshell, good credit management surely helps you in attaining a high credit score and lowering your cost to borrow. Make your financial moves wisely. Boost your FICO score while responsibly managing your credit.