What is a FICO Credit Score?
FICO is registered trademark for Fair Isaac and Company, or Fair Isaac for short.
Fair Isaac is a company who constructs ‘credit score’ tools for lenders who use them
to evaluate the credit of their customers and prospects. FICO credit scores are among
the most well known credit scores, but there are certainly other competitors of Fair
Isaac who also construct credit scores. Additionally all three of thenational credit
bureaus may construct proprietary credit scores of their own - independent of Fair
Isaac.
FICO credit scores have become well known to consumers over the last several years
because they are often used in mortgage loan transactions. For example, a lender wishing
to extend a home mortgage loan to a consumer, may order a FICO score on the consumer
to try to predict whether the consumer is going to default on the mortgage loan at
some date in the future. A FICO score ordered through a credit bureau is only based
on elements in your credit report. With FICO scores, a higher score means you are
less risky for the lender. As a result, a high FICO score may mean you qualify for
a larger loan or perhaps a better interest rate.
FICO credit scores have traditionally only been available to lenders as a tool to
evaluate your credit. However, FICO has also made their scores available to consumers.
It is important to note that your credit score is not part of your credit report,
and in fact, it is separate from your credit report. Also, credit bureau scores cannot
be purchased without the simultaneous purchase of your credit report.
Non-FICO credit scores available on the Internet to consumers are much the same as
credit scores from Fair Isaac. They are all trying to compute a number that measures
how risky you are as a loan prospect based solely on the elements of your credit report.
Credit bureau scores do not use your income, net worth, race, religion, sex, marital
status, or age to compute your score. Credit bureau scores are only based on what’s
in your credit report.
This weblog is sponsored by Ovation Law.