Beginner Guide to
FICO Score
A FICO score is a type of credit score that is used by many lenders to help them make lending decisions. FICO scores are developed by the Fair Isaac Corporation and are one of the most widely used credit scores. Lets look at the ins and outs of FICO Score and how it can help us get a loan in New Zealand.
How is a FICO Score Calculated?
FICO scores range from 300 to 850, with scores above 700 considered to be good and scores above 800 considered to be excellent. FICO scores are calculated using a number of different factors, including payment history, credit utilization, length of credit history, and more.
- Payment history is the most important factor in a FICO score, accounting for 35% of the score. This means that paying your bills on time is the single best thing you can do to improve your FICO score.
- Length of credit history is the third most important factor in a FICO score, accounting for 15% of the score. Having a long history of responsible borrowing can be helpful in boosting your FICO score.
- Credit utilization, which is the percentage of your credit limit that you are using, is the second most important factor in a FICO score, accounting for 30% of the score. It is important to keep your credit utilization low, as this shows that you are a responsible borrower.
The other factors that are used to calculate a FICO score include the types of credit you have, the number of new credit inquiries you have, and your credit mix.
What is a Good FICO Score?
A FICO score of 700 or above is considered to be good, while a score of 800 or above is considered to be excellent. A good FICO score can help you qualify for a loan with a low interest rate.
Where to check your Fico score
When it comes to your FICO score, there are a few different ways that you can go about checking it. One way is to check with the three major credit bureaus:
Experian,
TransUnion,
Equifax.
You can also check with your bank or credit card company, as many of them now offer free credit scores to their customers.
Another option is to use a service like Credit Karma or Quizzle.
These sites will give you a free credit score, as well as provide you with some helpful tools and resources for managing your credit. Whatever method you choose, it’s important to keep in mind that your
FICO score is just one factor that lenders will look at when considering you for a loan or credit card. They’ll also look at your credit history, your income, and your employment situation. So even if your score isn’t perfect, there’s still a good chance you can get approved for the credit you need.
If you want to improve your FICO score, there are a few things you can do.
First, make sure that you pay all of your bills on time. This is the single best thing you can do to improve your FICO score.
Second, keep your credit utilization low. This means using only a small portion of your available credit.
Third, try to avoid opening new lines of credit. Each time you open a new line of credit, it can have a negative impact on your FICO score.
Fourth, if you have a mix of different types of credit, such as a mortgage, auto loan, and credit card, this can help improve your FICO score.
Finally, keep an eye on your credit report and dispute any errors you find.
