What is a Fico Score:Know in detail

We know that you come here to know about “What is a Fico score”.

The importance of Fico Score must be known by everyone.As Fico score implies your trustworthiness and credibility.It is the indication for the lenders how fastly you pay the loan.When you apply for credit card and loans, mostly lenders check your credibility through Fico Score.This way they decide whether you have to give debt or not.

Fico Score is basically 3 digit numbers which measures or check how much credits score you have at present, how much of available credit being used, how long you have taken credit and if debt is paid timely or not.Fico score help lenders to take decision on giving someone a debt or not.

Fico Score is launched 30 years ago by Fair Issac Corporation.This is introduced to the industries to provide the score of creditworthiness, that is useful for both lenders as well as consumers.

Why Fico Score is important?

Fico score help people to access the credit which is needed to take home loan, personal loan and many more.Even most of the Insurance companies will check the Fico Scores when giving you the service.The best thing is that a good Fico score can save your thousands of dollar in fees and interest as lender will charge less rate if you seen least risky for them.

what is a Fico Score
What is a Fico Score

A Good, Fair and consistent Fico Score will help to keep the cost of credit lower for the entire population.If the credibility is more visible, it will be easy and efficient for the lenders to process the loan or debt easily to the borrowers.

What is a Good Fico Score?

Fico Score is 3 digit number which indicate the trustworthiness and credibility.Higher the credit score, the higher the chances to get credit by the lenders.Every lenders has its own good or bad credit score, they own decide the good credit score that fits best for them.Also they decide wether to use this credit score or not.

There are range of score decided by the lenders to make them to take decision.This range may be considered to be the credibility range which is set up by most of the creditors.

Lets know the Fico Score as according to fair, better and good.

Fico ScoreRatingDescription
Less than 580Considered as PoorThis score is below the average score as determined by most of the lenders.This score ensures the lender that particular one is a risky consumer.
Between 580 and 669Considered as FairThis score is below the average score set by many lenders.Though this score is used by many lenders to approve the loan.
Between 670 and 739Considered as GoodThis score is nearly above the average score set by many lenders.This score is basically a good one to approve the loan.
Between 740 and 799Considered as very goodThis score is above the average score set by many of the lenders.This score determine that you are a good one.
Above 800Considered as exceptional
This score is well above the average score set by lenders.This confirms that you are one of the best borrower to get loans.

Fico Score vs Credit Score

FICO SCORECREDIT SCORE
Fico score is specific type of credit score model discovered by Fair Issac Corporation that helps in preparing the credit score of borrowers.Credit score is used to know the trustworthiness and credibility for the individuals.This is generic model adopted by the industry.
This is basically a company prepared credit score.This is common scoring model prepared by different companies using varieties of data and parameter to analyse the creditworthiness.The example of this is Fico company.
This scoring model is accepted by most of the lenders while going to review the borrower application.This is most common form of scoring model used as a standard form of rating for most of the industry and also used to measure the risk and worthiness of borrowers.
The best score of creditness is set as 720 to 850.If someone having the credit score between this range then he will be regarded as good borrower.The credit scores range varies from one company to another.This totally depend on what the particular lending company set for the borrowers.
Mostly Good Fico score ranges between 690 to 719.But this is not the qualifying score for loan and line of credit.The card providers will set its own qualifying score.
Good Credit score differs from company to company.They set their own good score by which they can give debt.
This scoring model takes upto 6 months to generate the fico score.This scoring model differs from company to company.They can take atleast 1 month for generating score.
Fico score mostly calculated on the basis of recent loan applications upto 10%, balance loan amount 30%, credit age 15%, loan mix 10% and payment record 35%.The parameters and its percentage differs from company to company.They themself prepare the chart.
Most of the financial instituton utilise Fico score as a base for approving loan or credit cards.This is not used as a source for credit worthiness.This scoring model is little used by the company as it does not use different parameters.
Fico score is mostly used for loans like home mortagage loan, auto loans, credit cards.Credit score is not used for approving loans or debt.

How Fico Score is Prepared

As Fico Score is most popular credit score checking company as it is prepared by Fair Issac Corporation just said as Fico.The paramaters and its weightage for preparing the score is different from other companies.Fico score is considered to be one of the best scoring model now a days as it is prepared by considering the following factors like

Credit AgeThis factor weightage 15% on scoring the Fico Score.Credit Age means the duration of time for which someone is using the credit.The longer the credit age, better will be Fico Score.
Credit UtilisationCredit Utilization refers to the percentage of credit under the use at anytime.This factor weightage 30% on scoring the Fico Score.
Credit InquiryThis factor weightage 10% on scoring Fico score.It is a hard credit check.
Payment HistoryThis factor weightage 35% on scoring Fico score.Timely payment on your debt will show the best payment history and ultimately improve Fico Score.
Credit MixThis factors matters 10% on Fico score calculation.This factor is calculated by considering the type of credit they are using now like installment loan or revolving loans.

How many types of Fico Score

There are many versions of Fico Score which are used according to the requirement by the companies.Lets see this.

  • Fico score 2, 3, 4, 5, and 8 is used by the financial institution for credit card approval.
  • Fico Score 2, 4, 5, and 8 are used for auto loans.
  • Fico score 2, 4 and 5 are most commonly used in mortgage loan.
  • Fico score 8 are most commonly used for other exceptional purpose.

How to Check Fico Score For Free

There are many different ways through which you can check Fico Score for free.Approx 200 plus financial institution in US which provide free access of Fico Score to their customers.If you are here and want to know “how to check Fico Score For Free” then you come to the right place.Here we will discuss some of the best way how you check Fico score for free.

Through Discover Credit Scorecard

One of the best way to check the Fico Score for free is through Discover Credit scorecard.Through this, you can check Fico score for free if you are not a discover customer.For checking Fico score through Discover, you must require something to verify your identity.This way you can easily check your Fico Score.

Through American Express Credit Card

American Express is also a way to check Fico Score as well as Fico score history.The Fico Score provided here is given by Experian credit report.You can access Fico score through American express account.Here the Fico score is updated on a monthly basis.

Through Citibank Credit Card

Citibank one of the popular credit card provider which also provide free access of Fico score.The Fico score provided here is based on Equifax credit report.It also update on a monthly basis.

Through Bank of America

Bank of America also offers their customers to free access the Fico Score.Fico score provided here is based on Transunion credit report.This is also updated every month.It also help in boosting your credit.

Vantage Score vs Fico Score

Fico ScoreVantage Score
Fico Score is developed by Fair Issac Corporation.Vantage Score is developed and prepared by the joint venture of three major bureaus Equifax, Experian and Transunion.
It is a standard credit report that makes the lenders to determine the applicant risk.This is an alternate credit model of traditional scoring model.It also help to check applicant risk.
Fico Score ranges between 300 to 850.Vantage Score ranges between 501 to 990.
Fico Score uses 5 factors to determine the score like payment history, Credity history, Credit balance, credit utilisation, Credit age, Credit Inquiry.Vantage Score uses 6 factors to determine the score like Payment history, Credit utlization, recent loans, Available credit amount, Credit applications, Credit balances.
It does not uses machine learning for preparing credit report.Vantage score uses machine learning in preparing credit report.
If you are new to get credit card and don’t have any loan before then you can’t generate Fico score.Vantage Score can be prepared even if you are new or having loans first time.
In New Fico Score model, a hard inquiry within 45days is treated as one.But this window applies only for student loans, Auto loans, and Mortgage loan.In Vantage Score model, a hard inquiries within 14days is treated as one for all types of loan whether it is credit card or mortgage.

Conclusion

In this article, we have discussed about “what is a Fico score”.Here we have explained about Fico Score, What is a good Fico score, Fico score vs Credit Score, how Fico Score is calculated and many more.You got a lot of information after reading this article.

Fico score is required by every financial institution for approving loan or credit cards.Fico Score determine the risk factors of a particular applicant who apply for credit card or other loans.Fico Score make easy for you as well as financial industry to decide whether to give loan or not.

I think that this article will be valuable for you.You will get lot of information here.If you think this then share this to your friends and also comment what you think about it.

What Fico Score do I need to buy a home?

To buy a home, the required Fico scrore vary according to the type of mortgage loan you apply to buy home.There are diiferent types of mortgage loan just as conventional loan, VA loan, USDA loan, FHA loan and many more.Fico Score vary in all these types of mortgage loan.Conventional Loan require 600 Fico score, FHA loan require 500 Fico score, VA loan require 620 Fico score, USDA loans require 640 or less Fico score.Conventional loan is common for all, FHA is also common and backed by Federal Housing Corporation, VA loan is eligible for military community, USDA loan apply only in rural area if you wish to get home in rural area.So before applying for home, be cleared about the type of mortgage loan you wish to apply.

What is a Fico Score 8?

Fico score 8 is latest and most common version of Fico Score.This is introduced in the industry in 2009 to improve the previous version of Fico Score.It also calculate in the same way as previous.

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