If you have seen the freecreditreport.com commercials you know that a FICO score is a number between 450 and 850. But what does it mean and how does it affect your life.
A FICO score is an indicator that tells others just how likely it is that you are going to pay back any debt that you may have. It looks at things such as how well you have paid your bills in the past, how much debt you currently have and how easily you can pay that debt.
Banks will look at these scores before lending to people to get an idea of who they are lending to and how likely it is that they will get that money back. Scores above 700 indicate that they are likely going to get paid back, while scores below 600 indicate that they will almost certainly not going to see that money again.
How does this affect your life and why would you want to keep this score as high as possible? Well the biggest reason is that it is what everyone looks at.
For starters if you ever want to buy a house and don’t have the $100,000s of dollars lying around to do it you are going to have to take out a loan. If your FICO score sucks you will probably not be able to get one, or if you do the interest rate would be so high that you would struggle to pay it.
Also if you want to rent an apartment or a house your landlord will be looking for indications that you are responsible and that you will repay them. The best way to do this is through the FICO score.
A FICO score really does affect the quality of your life because anyone looking to enter into a business agreement with you will have access to your score and statistics. This means that the higher the score you have the better off you will be. It is just easier to keep it as high as possible.
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