The first step to purchasing anything with a loan or credit is a credit check. It could be anything from getting a new credit card, an automobile or a mortgage for a new home. Lenders who extend you credit regularly provide information to consumer reporting agencies about the type of credit account you have and how you pay your bills. This information forms the basis for your consumer report, which details your credit history as it has been reported to the credit reporting agency by lenders who have extended credit to you in the past. Every U.S. consumer typically has three reports, one at each of the three major U.S. consumer reporting agencies (Equifax, TransUnion, and Experian). Often, lenders report details of your credit history to more than one consumer reporting agency.
I have had people ask me what FICO is an acronym for. The FICO score was first introduced in 1989 by FICO, then called Fair, Isaac, and Company so that stuck and is a little credit score trivia for you. People have also wondered how this score will impact them. Here are a couple examples to make it easy.
Two different people are borrowing $230,000 on a 30-year mortgage. A borrower with a FICO® Score of 760 could pay $211 less each month in interest as compared to a borrower with a FICO® Score of 630. That’s a savings of $75,960 over the life of the loan.
On a $20,000, 48-month auto loan, the borrower with a FICO® Score of 720 could pay $131 less each month in interest as compared to a borrower with a FICO® Score of 580. That’s a savings of $6,288 over the life of the loan.
How is my credit score calculated?
What Is A FICO Score? What Does It Mean To Me?
What does the FICO score mean?
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