Fix Credit Score - What Is A FICO Score and How Is It Calculated?

Are you looking to learn more about FICO credit scores?

Almost every day we hear someone talking about credit scores.

Exactly what is a FICO score, what does it mean, and why is it so important?

A FICO score is a rating system that lenders use to get a quick overview of your ability to handle debt.

Your actual score is a 3-digit number, ranging between 300 on the low end and 850 on the high end. Your score shows lenders how much of a risk you would be to them if they approved you for more credit.

The higher your credit score, the better.

Having a higher score will result in creditors looking at you as a better credit risk. This increases the chances of your application being approved...and at lower interest rates.

Scores in the low 600s will result in you having trouble finding any type of credit as your applications will be denied. On the other hand, a score of 720 and above will get you easily approved for the best interest rates out there.

How is your score calculated?

Your score is based on the information contained in your credit report. Using a mathematical equation, this information is condensed into a single number and made available to various lenders.

The main areas of a credit report looked at in calculating your score are:

How much debt you have
How long you have had the debt
How much of your available credit you are using
The types of credit accounts you have

While some creditors may take your entire credit report into account when making a decision, the majority of lenders will accept or reject your loan application based solely on your credit score.

This is because FICO scores have been proven to be so accurate in predicting a person's ability to repay their debt that over 90% of all loan decisions are based on your credit score alone.

Think about that for a moment. Lenders are going to make a decision about you and your loan applications on the basis of a 3-digit number!

This is why having a good credit score is so important - your financial future can depend upon it.

Creditors know what your score means to them, and so should you.

Next, discover what message your FICO score is sending to lenders...along with a free weekly newsletter that will help guide you through the steps to better credit, at http://fixcreditscorefast.org/fico-credit-score