FICO Scores is a gauge used by lenders to help make accurate, reliable, and fast credit risk decisions across the customer lifecycle. It is a credit risk score that rank-orders consumers by how likely they are to pay their credit obligations as agreed. It is the most widely used broad-based risk score that plays a critical role in making billions of decisions each year.
Get a broad-based view of risk
FICO® Scores offer a consolidated view of how consumers repay credit obligations, including accounts that are held by other lenders. FICO scores are empirically built with the aid of consumer bureau data from millions of consumers. These scores are updated regularly to reflect changes in consumer behavior and lending practices.
Extend credit with confidence
FICO® Scores are highly predictive measures of applicant and customer risk. Credit grantors can better determine, for instance, which consumers to target, how much credit they should extend, and whether to raise a credit line.
Attain targeted risk control from a multi-scorecard design
A FICO® Score is generated with the aid of multiple scorecards. Each scorecard is tuned to assess risk for a specific consumer segment – for example, consumers with serious delinquencies.
To streamline model updates, scorecards are aligned to reflect the same risk across FICO scoring systems and releases.
- Firstly, Flexible
- Secondly, Powerful
- Thirdly, Trusted
How FICO Works
With FICO, you can achieve consistency and compliance. It helps lenders in making consistent, unbiased risk decisions, and support compliance with national, local, and global regulatory requirements, like Basel II. FICO works in ensuring the scores are understood and accepted by regulators globally.
FICO scores is widely accepted by industry leaders. And is used by Fannie Mae and Freddie Mac. It is used by rating agencies including Standard &. Poor’s and Fitch IBCA in the securitization of industry. Loan pools into bond securities.
FICO supports compliance and customer relationships and. Comes with reason codes that indicate why the score was not higher. These support regulatory compliance and communication with consumers. So they can improve their credit standing over time.
The Main Factors Involved in Calculating a Credit Score Are:
Creditors would want to know as much about you as possible. This includes your name, address, postcode, salary. And whether you are single, have a family, rent your home or own it outright. All this helps the lender in deciding. Whether or not to extend credit to you.
Your credit history details what you have done in the past. If you have always paid your debts, your credit history will. Reflect that and you’ll likely have a good credit score. On the other hand. If you have outstanding debts, multiple loans, and patchy repayment history. Then it may not be a good one.
If you have very few enquiries in your credit profile, then it shows a lender that you are in charge of your finances, which is likely to reflect in your score.
Every time you apply for credit, you leave behind a memory. This means that every time a lender, employer, insurer, landlord, or debt collection company looks into your credit profile, they also leave a memory. Having lots of enquiries over a short time frame will make it appear that you are desperate for credit or are struggling with bill payments.
Events like bankruptcies, insolvencies, and County Court Judgements (CCJs) can also leave marks on your record and will harm your score. However, on the bright side, there are other public records that can help your financial reputation. Being on the electoral register is one-way lenders run a check on you at your live given address. They’ll also make use of public records to see if you’ve had your identity stolen.
What Is Not Included?
It is vital to understand that your credit score reflects only the information contained in your credit report. However, your lender may consider other information in its appraisal. For instance, your credit report does not even display your current income or the length of employment.
Be it as it may, your credit score is a vital tool that is used by lending agencies. Thus it is important that you monitor your credit report. This is the basis of your credit score, thus reviewing it at least once a year and correcting any errors on it is crucial. Also, if you find that your credit score is low and needs assistance in removing any negative marks, one of the best credit repair companies might be able to help.