FICO SCORE Meaning and
Definition
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FICO Score is a numerical representation of an individual's creditworthiness and is commonly used by lenders to assess a person's likelihood of repaying borrowed funds. The acronym FICO stands for Fair Isaac Corporation, the company that developed this scoring system. The FICO Score ranges from 300 to 850, with a higher number indicating a better credit profile.
This score is formulated using various financial data obtained from credit reports, including payment history, credit utilization, length of credit history, types of credit used, and new credit applications. Each factor is given different weightage based on its impact on creditworthiness. For instance, payment history has a significant influence on the FICO Score. Late payments, defaults, and bankruptcies have a negative impact, while consistent on-time payments can positively influence the score.
The FICO Score provides lenders with a standardized measure to evaluate a person's credit risk. Higher scores reflect lower credit risk, making it more likely for borrowers to secure loans with favorable interest rates and terms. Lenders also use FICO Scores to determine credit limits, interest rates, and loan approval status.
Regularly reviewing and monitoring one's FICO Score can help individuals track their credit health and identify areas for improvement. It is crucial to maintain good credit practices, such as paying bills on time, keeping credit card balances low, and avoiding excessive new credit applications, to achieve and maintain a high FICO Score.
Common Misspellings for FICO SCORE
- dico score
- cico score
- vico score
- gico score
- tico score
- rico score
- fuco score
- fjco score
- fkco score
- foco score
- f9co score
- f8co score
- fixo score
- fivo score
- fifo score
- fido score
- fici score
- fick score
- ficl score
- ficp score
Etymology of FICO SCORE
The term "FICO score" is derived from the company that developed the scoring system used to calculate credit scores. FICO stands for Fair Isaac Corporation, which was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. The company developed an algorithmic system to assess creditworthiness and provide a numerical representation of an individual's credit risk. Over time, this scoring system became widely used by lenders and financial institutions, and consequently, the term "FICO score" became synonymous with credit scores.
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