creditscorechart.jpgYour FICO score is a number that tells lender what kind of a lending risk you might be. Some lenders use it and others don’t. Pay day loans do not use a FICO score to approve a borrower. Most everyone else does. It’s a way of quantifying all of your credit history into a single number that determines the types of interest rates you get and whether you are approved for a loan or not. FICO actually stands for Fair Isaac & Co., the group that developed the FICO score, and not the name to the measurement analysis tool. FICO is only the number used in the United States and doesn’t necessarily have any relationship to other credit measures used in other countries. The number is between 300 and 850, with good scores varying from lender to lender. Some lenders think a good score is anything above 720 while others may be more lenient and make a cut-off at 680. Types of credit lenders that check your FICO are credit card companies, mortgage companies, car dealerships, rental companies, and more. The reason that pay day loans do not use a FICO score is because they rely on your work history instead of your credit history to determine your ability to repay the loan.

Many people think that you can get your FICO score when you order a free credit report from any one of the three major credit bureaus. This is not true. The FICO score must be purchased through third-party companies that deal with Fair Isaac & Co. and it can cost upwards of $50 to get your score. If you are trying to get a new car, a dealership might offer to give you your FICO score, once they check. There is nothing to suggest that what they tell you is accurate, without getting the report firsthand. It’s always better to check for yourself what your FICO score is, particularly if you plan on making a large purchase like a house or car soon. If you are told you have a bad FICO score, it can be used to justify a loan with bad terms. To protect yourself, you need to check your FICO score yourself, even if you have to pay for it.

If you find out you have a FICO score of 720 or above, it can be a good way to leverage your credit rating. You can search for offers that better than average and even negotiate with current lenders to lower their interest rates if you don’t like them. Knowing your credit score can also speed up approvals for when you do need it in a hurry.

If you have a bad FICO score, don’t fret. There are still lenders who can help you raise your score. You can look at pay day loans as a way to create a credit history of loans that are paid back on time within the full terms of the agreement. This can begin to raise your score little by little.

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