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How Does FICO Credit Score Work

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How Does FICO Credit Score Work

fico 9 reportFICO credit scores generally range between a low of 300 and 850 as the highest possible score.

Higher scores indicate a lower credit risk to lenders. Each individual has nearly 50 different credit scores comprised for the Fair Isaac FICO scoring model as each of three national credit bureaus, Equifax, Experian and TransUnion, has its own database.

Learn more about FICO 9 Credit Repair and Settlement Programs - launching November 2014, and how recent changes brought on by the Consumer Federal Protection Bureau (CFPB) and Fair Issac Credit Reporting (FICO) are removing Medical Debt and Debt Settlement from negative reporting – and improving credit scores for thousands-millions of Americans in debt.

Learn more bout FICO 9 Credit Repair and Settlement Program

How Does FICO Credit Score Work


Higher FICO Scores = Lower Payments

When you apply for credit for a “credit card, a car loan, or a mortgage”; lenders require to know what risks they take by loaning money to you. FICO credit scores are the defacto industry-standard for credit scoring – which is used by almost all lenders use to determine your credit worthiness and the level of risk you present in borrowing.

Every American consumers has (3) three FICO scores – one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time

Taking steps to get your FICO scores in the higher ranges can help you qualify for better rates from lenders. The higher your FICO scores, the less you pay to buy on credit – no matter whether you’re getting a home loan, cell phone, a car loan, or signing up for credit cards.

Example: $150,000 30-year, Fixed-rate mortgage:

Your FICO® Score Your interest rate Your monthly payment
760 – 850 5.78% $878
700 – 759 6% $899
680 – 699 6.18% $916
660 – 679 6.39% $937
640 – 659 6.82% $980
620 – 639 7.37% $1,035
Sample Rates

As you can see, in the example above using today’s national rates, a person with FICO scores of 760 or better will pay $262 less per month for a $150,000 30-year, fixed-rate mortgage than a person with FICO scores below 620 - that’s a savings of $3,144 a year.

You can see how essential it is to get your scores in the higher ranges if they are low, and also how important it is to keep them high if they are good.

How FICO Credit Scores Work

FICO® is a registered trademark of Fair Isaac Credit Reporting (myfico.com)


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