Do you know what a FICO score is, or how it’s calculated? That’s important information to know, as it impacts your life on a daily basis.
FICO scores are the credit scores created by Fair Isaac Corporation. Virtually all the top lenders use FICO scores to determine weather an individual is a good or bad credit risk. Your score is a direct correlation to your credit report. According to Investopedia,your payment history makes up 35% of your FICO score, while your total debt owed amounts to 30% of your final FICO score. Making up the final 15%, 10% and 10% of your FICO score are the length of your credit history, any new credit that you have taken on, and the type of credit you have used.
A low FICO score means: you can be turned down for an apartment, made to pay a higher interest rate on an auto loan, and have higher monthly mortgage payments. If you’ve made late payments on credit cards or mortgage payments, defaulted on a loan, or have a high debt-to-credit ratio, every month when you pay your rent, you could be paying a higher price than your neighbor. Or when you make your monthly car payment, the guy down the street may be paying less than you because he has a higher FICO score.
Learn how to increase your FICO score. And ask for assistance if you need help setting a budget, getting spending under control, and for general money questions. A daily money manager can help with all of these issues.