FICO® Score

by Jerin Young CFP® CKA® Senior Associate Financial Planner | March 18, 2024

Duration: 4:38

Show Notes

Are you looking for a quick overview of what a FICO® score is? In today’s Finance Moment Podcast, Senior Associate Financial Planner Jerin Young provides a brief overview of a FICO score is and its purpose.

What does FICO mean?

In 1989, a tech company called Fair, Isaac, and Company, known today as FICO, began working with credit reporting agencies to develop an algorithm to standardize credit reporting.

The primary objective of credit scores and credit reports are important because they are used by lenders, utility companies, landlords, and other entities to review how borrowers have handled credit in the past and to understand their current debt obligations.

How are credit scores determined?

Credit scores are determined by many factors, and while the exact formulas are not revealed, five main categories affect the scores. They are payment history, credit utilization, length of credit history, mix of credit types, and recent applications.

Why is it important to know my credit score?

Because of its wide application, it is essential to understand your credit score, monitor it regularly and take steps to improve it if necessary. Individuals can better position themselves financially and protect themselves against potential threats to their creditworthiness. Take charge of your financial future by staying informed and empowered through regular monitoring and responsible credit management practices.

Transunion, Equifax, and Experian allow individuals to view their credit report for free once a year on annualcreditreport.com.

For more information about other financial literacy topics, please visit our website www.onlyworkforyou.com