The FICO score is a kind of credit score assigned to American individuals with a credit history. Its name refers to the Fair Isaac COrporation, which created this scoring system. Differences in a person’s FICO can impact what sort of interest rates they qualify for on home mortgages, credit cards, and other forms of credit. Read on to learn more about what the FICO score is, how it works, and the ways it can affect many different transactions.

The basic idea of a credit score is to give creditors a simple indicator of how likely someone is to repay them on time. Thus the FICO number reflects whether or not an individual has previously made payments which were owed, if these payments were received on time, and how much money is currently owed. According to the FICO web site, sixty-five percent of the number is calculated on the basis of “payment history” and “amounts owed.”

However, these are not the only factors which go into its formulation. Fifteen percent is attributed to how long a person’s credit history is. For example, someone who is thirty years old and didn’t buy anything on credit until the age of twenty-five might have a different FICO level than a person who started doing this when he or she turned nineteen. A longer length will also generally affect the previously mentioned category, because there will be a more substantial record of either on-time or late payments.

Two other factors which influence what sort of FICO score a person receives include the kinds of credit they have utilized and any efforts to open new accounts. FICO’s web site indicates that the quantity of information requests and/or new credit accounts established in recent days will affect an individual’s score as well. However, it states that there is no impact from inquiries initiated by the person that the score applies to, or from potential employers finding out what the number is.

Overall, a FICO score is determined using several types of data from multiple sources. It can be as low as three-hundred or as high as eight-hundred and fifty. Maintaining a good FICO score is important for anyone who borrows money in one form or another; some jobs or rental housing also cannot be obtained by someone with a low number. This gives it the potential to impact almost anyone’s life, especially when they do business with larger companies.