Any time you apply for credit, whether it is a mortgage, car loan credit card or student loan, the lender wants to know what their risk will be. FICO Scores are used to give the lenders the ability to determine your credit risk.
Each credit bureau Experian, Equifax, and TransUnion generates a FICO score on you. Your score changes according to the personal information stored by the credit bureau stores. Interest rates and loan amounts are determined by FICO scores. Improving or removing damaging items from your credit report improves your FICO to help you qualify for better loan terms, and greater loan amounts.
For your FICO score to be figured, you’ll need an account that’s been open for more than 6 months and one that’s been updated in that same amount of time. This enables the bureaus to have enough information, and updated information to generate a FICO score.
Credit scores are called FICO scores, due to the fact the technology and software was created by a company called Fair Isaac Company. Ergo F-I-CO was born.
FICO scores provide a guideline for lenders to determine risk on loans they write. This is all based on the information and data you provided in your report. The higher your score the lower the risk- and vice versa.