What Does a FICO® Score Mean?

The difference between a FICO®, credit, and VantageScore® can be convoluted and throw people for a loop. Despite the nuanced differences that make them hard to understand, they are extremely essential to understand for Americans hoping to get a better grip on their financial well-being. To learn more about these different types of credit scores and their implications on consumers, call a Florida attorney from Sharmin & Sharmin at your earliest convenience. 

The Implications of a FICO® Score

In short, FICO® stands for the “Fair Isaac Corporation,” the company that built one of the most widely used models for credit scores. The FICO® Score reflects someone’s credit score and aims to give creditors a better idea of their client’s probability of paying back loans given to them, in addition to their financial standing. All in all, someone’s FICO® Score can influence their ability to buy a house, finance a car, or pull out loans for higher education.

In addition to deciding whether or not someone will receive a loan, a FICO® Score can influence the conditions of the loan. A low FICO® Score could mean that someone is still given a loan but that it has a higher-than-average interest rate and a larger down payment requirement. Alternatively, someone with a very high score could be given plenty of time to pay off a loan at a very low-interest rate – ultimately costing them less money.

What Makes a FICO® Score Go Up or Down?

FICO® Scores are important to pay attention to as they are the country’s most popular scoring model for lenders to use. It is therefore recommended to have a good idea of what can increase – or decrease – someone’s score. 

• 35% – The amount of a FICO® credit score that accounts for payment history and timeliness
• 30% – The amount of a FICO® credit score that accounts for how much of someone’s credit they use and is owed 
• 15% – The amount of a FICO® credit score that accounts for the length of credit history and the age of all accounts 
• 10% – The amount of a FICO® credit score that accounts for how many new lines of credit have been recently opened
• 10% – The amount of a FICO® credit score that accounts for the mix of different types of credit (such as credit cards, auto loans, etc.) 

Taking certain financial initiatives such as having a few different types of credit, using credit often, paying it off on time, and ensuring longevity across all accounts are all good ways of maintaining a high FICO® Score.

Serving the South Florida Community, One Person at a Time

Oftentimes, FICO® Scores, among other types of convoluted finance-related terminology, get lost in translation. While it may seem overwhelming or daunting, you do not have to deal with trying to figure it all out on your own. Sharmin & Sharmin is a team of highly-trained and qualified Florida finance attorneys who understand what it’s like to struggle with credit. Call our team today at 1-844-Sharmin or message us through our online contact form on our website.