What is the Most Commonly Used Credit Check? FICO Scores Explained
Discover why FICO scores are the leading credit check used by lenders in the U.S. and how to maintain a good score.
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FICO scores are the most commonly used credit check in the United States. They are employed by the majority of lenders to evaluate a person's creditworthiness. Maintaining a good FICO score involves timely payments, low debt-to-income ratio, and minimal hard inquiries.
FAQs & Answers
- What is a FICO score? A FICO score is a type of credit score that lenders use to assess an individual's creditworthiness, based on their credit history and financial behavior.
- How is a FICO score calculated? A FICO score is calculated using factors such as payment history, amounts owed, length of credit history, new credit, and types of credit in use.
- What score is considered a good FICO score? A FICO score above 700 is generally considered good, while scores above 750 are considered excellent.
- Why are FICO scores important? FICO scores are important because they help lenders predict the risk of default, thus influencing loan approvals, interest rates, and credit terms.