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Why FICO Scores Matter

By George Hauser
Published: Sunday, December 13th, 2009

You have probably heard about FICO scores if you are a credit card holder. Lenders of credit take risks in the business of money borrowing. It is a basic need that they are able to strictly apply the rules in order to get customers who can pay. A great percentage of American lending companies have lost billions of dollars to people who run away from their debts and from the law. These people are the prime reasons why credit companies find the need for in-depth evaluation before they approve loans. Knowing about FICO scores is one of the many good credit score tips that you must take into consideration.

FICO Scores are determiners for credit risk and these are most useful to you as it is with the lender. Every credit bureau (Experian, Equifax and TransUnion) calculates these scores individually, so that you may have three different data that you can compare. Now, the importance of comparison can be used when you feel the need to check for frauds or identity theft.

Fair Isaac and Company are the founders and developers of FICO scores.  They are widely used and trusted because almost all credit reporting companies in America uses software developed by the same company, thus “FICO scores.” Most credit score tips highlight these scores as the prime basis for risks that are found in your credit card reports. These risks may pertain to whether you are a possibly good borrower or a future problem.

However, FICO scores in your credit report does not present a sole basis for whether you can be a good or bad borrower. Although a good score may mean a potential borrower, there are other factors that can be used in the calculation. In improving scores, there are a lot of credit score tips that you can use to manage better points.

In your credit card report, the calculation of FICO scores can only be given if you have used a credit card for the last six months. This ensures that you have recent information which can be used to check for your most recent transactions—a factor that greatly affects your FICO calculation. This information is kept by your credit company in file so that calculation for credit scores will be most available whenever you need them.

FICO scores are not just factors that affect decisions of the lenders. Rather, these are also points that you need in order to make a good strategy on leveling your own risks. The more credit score tips you follow, the better is your performance. This will not only lead to trust with your credit card companies but this will also be an advantage if you are applying for loans.

Better FICO scores that are made by following good credit score tips can mean lower interest rates in loans, greater amount of money that can be lent and even higher chances of loan approval. It takes time to get good credit scores. You must learn how to handle FICO scores and make it a point to manage a good performance, whether you have but one or more credit cards.

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