No doubt about it- not all credit scores can be FICO scores! It’s been almost 25 years since the FICO score became known for checking the credit value of borrowers. Currently, according to FICO, approximately 90% of lenders use these numbers to reach loan conclusions. You can find other types of credit scores available that are not the same as the FICO score, with the maximum limit sometimes being around 100 points. What is the difference between a FICO score and other types of credit scores?
Since 90% of lenders prefer to look at the FICO score as it gives them enough support to give approval and decide the interest rates and other terms. Whenever you want to apply for a mortgage, auto loan, or credit card, here’s how it goes. Traditional banks are eager to take a look at your FICO score which is fundamental. They are able to think through it very clearly when there is a loss or again. After checking the FICO score, lenders can be sure whether they will get their money back.
There are different ways to calculate the FICO score, while you may find that some other companies build their credit score to reflect the FICO score. The methods of their calculation are virtually specific.
Who Makes Up Our Credit Score?
Whenever it comes to credit score, it usually comes with a three-digit number that tells the lenders how the borrower is doing financially. There are 3 different credit agencies which are TransUnion, Equifax, and Experian. These agencies have complete control to change the payment habits of the borrowers. After all, a credit score is one of the very essential things for availing of any kind of financial aid. Watch the full video for an in-depth explanation of the FICO score.
How to Understand the Concept of the FICO Score and Other Credit Scores?
Knowing the difference between FICO scores and other credit scores is very essential as people sometimes start getting very confused. This is where you can see the difference between them separately. Because your overall life depends on the score whether it is called a FICO score or credit score. So let’s try to understand the concept of both.
- A large number of lenders such as 90% use the FICO score for 25 years.
- FICO scores enable lenders to make quick decisions.
- You can feel quite confident while applying.
Other types of credit scores:
- Doesn’t match your FICO score.
- It cannot be used for making lending decisions.
- This can be a reason to measure your confidence more or less.
Can Credit Score Predict Loan Repayment of Borrowers?
In fact, credit scores cannot be taken to predict whether a borrower will repay a loan. Instead, it is taken by lenders as a barometer for an individual’s strength for future loan repayments. It is also enough for lenders to guess the source of their money back.
Do You Know What Is The Minimum & Maximum Credit Score?
The minimum credit score starts in the range of 300 to a maximum of 850, although there are limits to the credit score. These categories can be very effective for you to understand the credit rating better. Below you can see an example that will reveal the secret you might not have known about credit scores. About 60% of Americans are not aware of their credit score. Nevertheless, this example credit score from minimum to the maximum will help you understand better. Can You Reach It?
For example, the FICO score looks like this:
- Poor credit: 300 to 579
- Fair credit: 580 to 669
- Good credit: 670 to 739
- Very good: 740 to 799
- Beyond very good: 800 to 850
It doesn’t matter what score you target. But they all give you some idea to know your credit worth status. Having a good score can help you get 200 Dollar Payday Loans Online the Same Day with Direct Deposit with reasonable interest rates. One of the best ways to determine your credit score is to track it periodically which will prevent you from getting into any trouble. It’s not more than you think because you can improve your credit history through periodic tracking.
There have been some mistakes in your past due to which your credit score has come down. Do you need $255 payday loans online same day with instant approval without any credit check? “Don’t worry” Apply directly to payday lenders in the United States with no checking account. Here you can apply for a payday loan without affecting your eligibility.
Originally published at https://www.handypaydayloans.com/blog/fico-score-vs-credit-score-do-you-know-the-difference/