FICO Credit Score

FICO credit scores are determined by the overall credit history of each consumer, which provides a simple way for lending institutions to determine to whom they will or will not lend money. The Fair Isaac Company sets the numerical ranges of a FICO credit score for each consumer entered into financial use systems. This number is a three-digit code that ranges from 300 to 800 and is assigned to consumers in order to represent an individual's financial history. Well over half of all financial companies use this rating system to influence lending decisions and to decide loan terms.

Many things are determined by this number such as mortgages, car loans, insurance premiums and even employment opportunities. FICO credit scores are basically a summary of a consumers previous financial history, made available to any company that needs access to a customer's financial habits. If a FICO credit score is over 720, a person has the best chance for receiving good interest rates, a variety of loan options and other considerations that are based on this figure. However, if someone falls below the dreaded 650 range, low rating could adversely affect their financial options.

Various factors can affect the numerical value that is ascribed to a financial situation. FICO credit scores are influenced by such things as payment history, on-time payments, the amount of debt accrued and many other factors. A FICO credit score is determined by a percentage breakdown of financial categories that the Fair Isaac Company has determined to be fair and accurate. Categories such as debt, payment, types of debt and length of recorded financial history are allotted percentages that are calculated in order to get a final number. The score then is assigned to a report providing a numerical code that says it all to lenders.

A person's payment history is one of the most important percentages that influences this all-important financial figure. The most scrutinized loan that can influence a FICO credit score is a mortgage, so it is important to always pay a mortgage on time. In addition, trying to keep a debt load well below one's allotted limit will also affect the number. Charge card debt also influences the figure, but not as significantly as other types of installment loans. Wise, household money management is a key to receiving good FICO credit scores. People then can be rewarded by receiving lower interest rates and loan terms. "For my thoughts are not your thoughts, neither are your ways my ways, saith the Lord." (Isaiah 3:58)

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