If you’re looking to improve your credit score, chances are you’ve come across the term FICO. But what exactly is FICO and how can it help you? FICO stands for Fair Isaac Corporation, the company responsible for creating the widely-used FICO credit score. As part of their credit scoring model, FICO scores each individual’s credit based on a variety of criteria, such as payment history, credit utilization, and account types.
What Is a FICO Score?
A FICO score is a three-digit number between 300 and 850 used to represent an individual’s creditworthiness. The higher the score, the better the risk you’ll be seen as when applying for loans or credit cards. Generally, a score above 720 is considered “great.” A score between 680 and 719 is considered “good,” and a score between 630 and 679 is considered acceptable. Anything lower than 630 may require you to improve your credit in order to qualify for loans or new lines of credit.
How Can I Improve my FICO Score?
Improving your FICO score requires taking steps to improve your creditworthiness and credit history, such as:
- Paying bills on time
- Lowering your credit utilization ratio
- Paying off debt
- Limiting hard inquiries
- Applying for new types of credit such as a secured credit card
Taking steps such as these can help you slowly and steadily improve your FICO score and gain access to more favorable loan and credit card terms.
Conclusion
FICO is an invaluable tool for improving your credit score and increasing your creditworthiness when applying for loans and credit cards. Knowing how FICO scores are calculated and what steps you can take to improve your score can help you reach your credit goals and open new opportunities for financial success.