When you are applying for a loan or looking into refinancing your mortgage most likely your potential lender will bring up the importance of your FICO score. Insurance policies, new mortgages, and credit cards, all take both your FICO and credit score into account. There are a lot of FAQ about FICO scores you can usually find on lenders or banks sites which will detail how your FICO score is calculated. I have also included some questions and answers that help give you a better idea of what a FICO score is and how to improve it.

So, What is a FICO score?
A FICO score is a measure of the risk potential lenders are taking by borrowing money to you. Your FICO score helps lenders estimate how much of a credit risk you are and how likely you are to pay back debts. Developed by Fair Isaac and Company in the 1950s, this credit scoring system has been accepted and used by a majority of lenders as well as having approval from the FTC.

So what things determine my FICO score?
For the most part any potential lender will look at your credit history and information. Factors in your credit report, both good and bad, effect your FICO score. There are 5 categories of credit information lenders look at which are, payment history, length of credit history, new credit applications, type of credit used, and outstanding debts. Improving any of those 5 things will help your FICO score as well as credit rating.

So how can I make my credit and FICO score better?
Due to the fact that FICO scores play big off of your credit rating, and we know that credit ratings can be approved, it is possible to drastically improve your FICO score in a short time. Make sure to pay bills off on time, cancel unnecessary credit cards, try to maintain low balances on your remaining credit cards, and do not apply for new lines of credit unless necessary. Get a copy of your credit report and make sure everything in it is accurate. Make sure your credit is checked only if necessary.

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