You maybe wondering, "What is a FICO Score?". The FICO Score, is your credit score, it is available for your review through all three major consumer credit reporting agencies: Experian, Equifax and TransUnion. Lenders use your credit score to make accurate, reliable, and fast credit decisions when you apply for a loan. There are five main components of a FICO Score and managing these five components will help you maintain a good credit score.
What is a FICO Score: 5 Components
Simply put, your FICO score is the number that determines your credit worthiness and in turn, things like the amount of money you can borrow and your interest rates for repayment of that line of credit. Your FICO score can range from 300 to 850. The higher your number, the more access to credit you will have. Your FICO score is calculated from the 5 criteria listed below:
- Loan repayment history
- Amounts owed
- Length of credit history
- New credit accounts
- Types of credit used/credit mix
This information is pulled from your credit report and pulled into the FICO Score formula. Your FICO score moves up and down as the information changes. Your precise score at any given moment is a snap shot in time, because new information is continuously added to your credit report as your make payments against the debt that you owe.
You have the power to improve your score by managing credit wisely and paying all of your bills on time. You are entitled to review your credit score for free once per year, I recommend using AnnualCreditReport.com to obtain this information.
FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.