“FICO Score” is one of those terms you’ve likely heard before, but you may not know exactly what it is. It usually comes up when someone is applying for a credit card, mortgage, auto loan, or any other form of credit. The truth is that your FICO Score is a key indicator of your credit health, and a low score can make life much more difficult in a number of ways.
At Jubilee Credit Freedom, we want our clients to understand every part of their credit repair process, so we’re here to take all the mystery out of your FICO Score. Below, you’ll learn what it is, how it’s formulated, and what you can do to improve it.
“FICO” actually stands for Fair Isaac Corporation, and they introduced the first credit risk score in 1981. Since then, they have become one of the premier credit scoring companies in the nation, influencing a wide variety of credit products.
A FICO Score is a three-digit number ranging from 300-850, and an individual’s score is based on their credit reports, which are statements generated by the consumer credit reporting bureaus that detail your credit activity and current credit situation. The basic idea is to help creditors know how likely a person is to repay their debt on time.
Why is the FICO Score So Important?
Many creditors, lenders, credit card issuers, and insurance providers look at a person’s FICO Score before approving them. If your score is high, your chances are good, but if it’s low, you’ll likely be rejected. In the case of insurance companies, a low score can actually lead to higher premiums.
This is why it’s very important to know your score before trying to apply for a credit card or loan. Many creditors/lenders actually have a FICO threshold for approval, which you can find out by either looking at their website or talking to a representative directly.
Payment History: What is your history of paying bills on time?
Amount Owed: How much do you owe on your different credit accounts?
Length of Credit History: What are the ages of your credit accounts?
Credit Mix: How many different types of credit do you use?
New Credit: Have you recently applied for a new line of credit?
If you’re looking to increase your FICO Score, doing it yourself can be a frustrating hassle, but the team at Jubilee Credit Freedom can help you take precise steps that will dramatically improve your score in 90 days or less. If you’re ready to start repairing your credit, give us a call today to get a FREE personalized credit consultation.