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Information About FICO Scoring

The FICO is an important factor in your credit scoring. Lenders base their decision to lend you money based on this specific information. FICO, a software program that calculates your personal credit, is actually the Fair Isaac and Company. Your information is kept on file and changes as your spending habits change. In order for your score to be accurately kept, you must have an account open for six months or more. This account should be open and current, with changes occurring within the six months as well. This is necessary for proper FICO scoring.

There are three different companies offering you this information. Within the past few years this has become available to the consumer. It is good to check your credit report at least once a year to ensure that there are no mistakes. If you do find an error on your credit report it should be addressed immediately. This could cause a lower FICO score, which will lower your chances for certain loans. The better your FICO score, the more chance that you will have better interest rates on loans, as well as being approved by lenders.

Your credit score and credit report are two separate entities. A credit report is simply a history of your spending habits. This includes credit card use, loan repayments, and utility and cellular phone accounts. All this information is compiled, and when a lender checks this report, the FICO score is calculated at that time. They then base their decision to approve a loan or other form of lending to you based on that number. The FICO score and credit report also help the lender decide on how much of a limit you will receive. Income is not a factor when the FICO score is figured, only your credit history.

While you are entitled to one free credit report per year, you are not able to see your actual score. In order to see your FICO score you must pay. There are three major sites you can order your free report, and at that time you are eligible to purchase your score as well. This is a smart move if you are planning to make a large purchase, such as a house. If you find that your score needs improving you have time to repair past mistakes before a lender declines you or sets the interest rate high. It is important to keep your score as high as possible, enabling you to have better rates and higher limits on your loans, not to mention better insurance policies. Your FICO score can also be a deciding factor in a landlord approving you for a rental, or an employer choosing you over another candidate. There are a multitude of reasons for knowing your FICO score and for keeping it in good standing. If you haven't checked your score lately, perhaps you should right now. It could make all the difference in your next financial decision.

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