FICA Or FICO Credit Score – Know and Understand it

Most people have heard of the FICA credit score system but most don’t understand why lenders are so reliant on it. First of all, the correct term is FICO, not FICA. FICO stands for Fair Isaac Corporation the consultants who formulated FICO scoring for credit agencies. It is a mathematical formulation that takes all of your credit history as reported to the credit bureaus and puts it in a neat little scoring system to make it easier for lenders to make lending decisions.

It helps cut down the time required in making credit decisions. The reason you need to understand your credit score is so you can actively take steps to continually improve or maintain your good credit score.

We all know that credit is a necessary evil in our economy and when you know your FICO credit score you can be sure to stay on top of it and enjoy good credit deals. Lenders are worried about one thing and one thing only and that is getting paid back on time.

That is why they are so intent on dealing with people that have good credit scores. Basing their decisions on FICO scores gives them reassurance that you are a good risk and will be a good customer for their services.

Having a good FICO credit score also means quick decisions and that is important for both the borrower and the lender. Lenders do not want to have to go through entire credit reports from each one of the credit bureaus. That takes a lot of time and the information presented individually may not paint the correct picture of your credit history anyway.

FICO takes only the most pertinent information from each report and puts it together in a fundamental comprehensive manner designed to make an informed and speedy decision. That is good for you and your lender as you can get your business tidied up quickly and dependably.

Your FICO credit score can benefit you too because older credit mishaps count less on your credit score than they do in the individual credit reports.  That means you are haunted a lot less by mistakes made in the past. It is a much fairer assessment of your creditworthiness.

You can also get better terms and higher credit lines when your credit score is used instead of individual bureau scores. No one could argue the utility of that. When you know your FICO credit score you’re ahead of the game.