FICO is an acronym for the term Fair Isaac Corporation Score, a banking industry standard used to determine credit scores. Having a high FICO score is important as it means you have built yourself a good credit score, which shows businesses that you are trustworthy with repayments and loans.
Fico scores affect whether you can get credit and what interest rate you pay for credit cards, auto loans, mortgages and other kinds of credit. When testing to see what type of loans you are eligible for, most companies will base your approval off of your credit score. This means that having a high score will always be a benefit towards those in a lending situation.
Planning on taking out a loan for a car or obtaining financing for a mortgage? For most kinds of credit applications, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit cards or loans.
When looking for loans and credit cards, having a high credit score will determine what your interest rates are through the company that you are obtaining a card or loan from. It does not sound like much, but shaving 2 or even 3 percent off of a $200,000 mortgage will save you close to $6,000 in the long run. That is $6,000 that one could put live skor towards a new car or modifying their home or really whatever they wanted.
When trying to rent an apartment or obtaining loans for houses, good FICO scores come into play. Without good scores, your apartment application may be turned down. Having high FICO scores will determine how much you will have to pay on a deposit for your apartment, which includes phones and electricity and even natural gas.
Banks and businesses that use your FICO score will look at your scores constantly for fluctuation. They look at your scores when deciding whether to change your interest rate or limit on a credit card or whether to mail you offers. Having good credit scores will help you obtain low APRs on mortgages, as well as loans, and will work towards benefitting your finances in the long run.
To improve one’s FICO score, you need to do small things over time that will positively affect your score. Changing a FICO score cannot happen instantly, so do not be lured into promises by loan companies that claim immediate alterations to your credit score if you take loans out with them. In order to positively alter your FICO score, you need to pay your bills on time, always repay more than the minimum on loans and credit cards, and make sure you do not miss any payments on what loans you currently have out.
There are now low cost services available where you can monitor your FICO score. Monitoring your credit through the major three credit agencies will alert you to fraudulent actions on your account and allow you to fix any attempted identity theft.
What can also occur when trying to improve your FICO score are little nuances that show that you have a good score. For instance, some credit card companies that monitor scores will start sending you credit cards through the mail along with directions on how to activate them and repay them. Such small actions actually show that card companies trust your current score and want you to be a customer with them.
A site to test your score at is myFico.com. This site gives you a rough estimate of your FICO score by asking simple questions. It takes less than five minutes to do and just involves a basic relay of information from one’s loan and credit card history. The estimate given at the end can tell you where your score should be, and help you setup an accurate estimate as to what your score is.