FICO scores, developed by Fair Isaac Corporation, is a measure of creditworthiness of a person. The three foremost credit bureaus in the United States - Experian, TransUnion, and Equifax - maintain credit files of all those Americans who have ever sought credit. Their credit scores are based on the FICO scores (pronounced to rhyme with Eye-Co). This means that you, in fact, have three different FICO scores. These scores come in handy when you are trying to apply for a loan for a car or a house, for a credit card, or any other type of credit. It allows the bank or the private loan provider to decide whether to allow or refuse you credit.

Based on the FICO score you have, your credit supplier, whether a bank or a private lender, will offer you credit terms. The higher your score the better terms you get, such as low down payment and a low rate of interest. A low FICO score would not be to your advantage if you are seeking loans or credit.

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The system to check the creditworthiness of an individual was developed more than 50 years ago by Fair Isaac Corporation and is known as FICO score. Through your FICO rating various banks and other institutions which lend money decide whether to forward credit to you or not, and at what rate. This credit score comes in very handy to the lenders when you are applying for a car loan or a home loan, for a credit card, or any other type of loans. The FICO score ranges from 300 to 850 and the higher score you have the better it is for you when seeking credit.

Your Credit Report

Through FICO scores, lenders are able to approve your loan applications very fast. It enables them to make fast decisions. Your FICO rating is based on your credit report. The score changes as and when there are changes in your credit report. Your report contains information such as:

· The different types of credit you use
· When were your accounts opened
· Whether you have paid your bills on time

Your report contains many minor pieces of information that makes sense to the lending authorities when coming to any decision. The credit report also informs the banks and other lenders whether you are further seeking credit elsewhere.

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