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What Is A FICO Score? What Does It Mean To Me?

By
Real Estate Agent with Coldwell Banker 475.140531

The first step to purchasing anything with a loan or credit is a credit check. It could be anything from FICOgetting 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?

How is my FICO score computedWhat does the FICO score mean?

What does my FICO score mean

Comments (43)

Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Noah

FICO, and buyers, will appreciate this thorough write-up on credit scores and their impact.

I think there is a big misundertsanding about how FICO scores are calculated, and what the scores mean as far as being able to borrow money. I've been to several classes on credit scores and always learn something new. There are lots of myths out there about them. 

Jeff

Sep 22, 2015 12:00 AM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

Yes, this is great information to share about FICO scores. The graphics are very helpful!

Sep 22, 2015 12:08 AM
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Thanks so much friends, have a great day.

Sep 22, 2015 12:19 AM
Stephen Weakley
Nationwide Mortgage Services - Rockville, MD

The sad thing is most prople don't care about their FICO score until they try to make a life altering decision like buying a house.

Sep 22, 2015 01:12 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

I had no idea what FICO stood for myself after all these years. This is great information for the consumer Noah!

Sep 22, 2015 01:47 AM
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-739-3843

Noah, credit score trivia, love it! I can add that to my continuing list of useless info unless I'm trying to win at Trivial Pursuit. However, I have thankfully learned through the years how very IMPORTANT a good FICO score can be. I am now in the mid 800s with my score and my wonderful (departed) dad would be so proud!!!

Sep 22, 2015 03:46 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Noah, goof info.  Available credit is the one area most easy to manipulate in order to increase a score.  By bring balances on credit cards down below 1/3 of the credit limit, credit scores can take a huge jump in a matter of just 30 days. 

Sep 22, 2015 07:03 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Can't promote this information or its understanding enough in my estimation, Noah Seidenberg ... excellent job!  

And what's a FICO score?  These days .. it's everything!  It's that important ...

Gene

Sep 22, 2015 07:42 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Noah

Your post on what is Fico Score . . . . is very informative.

Good luck and success.

Lou Ludwig

Sep 22, 2015 11:48 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Good info, Noah Seidenberg ... with real, sobering, numbers. 

Sep 22, 2015 12:47 PM
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Thank you Carol Williams and everyone else.

Sep 22, 2015 12:59 PM
Mike Rock
Complete Design - Granite Bay, CA
Granite Bay Luxury New Construction...For Less

fair and iaac..... wow i didnt know that. so now that you told me, do you have to shoot me??

Sep 22, 2015 01:24 PM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Noah, it's amazing what interest rate can do to a mortgage payment. Always pays to have a high FICO score -- it's like money in the bank.

Sep 22, 2015 02:04 PM
Althea Kippes, Esq.
A.T. Kippes, Real Estate Broker - San Francisco, CA
Serving San Francisco to Silicon Valley!

You did a great job on explaining FICO scores and the additional graphics help with understanding.  Thank you

Sep 22, 2015 03:58 PM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hi Noah -- many throw around real estate and financial terms that we may be intimately aware of but not everyone is familiar -- you explained not only the term but the importance of knowing the "why".   

Sep 22, 2015 11:24 PM
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Thanks for the nice comments friends.

Sep 23, 2015 12:58 AM
Bill Meloy
NEXA Mortgage - Palm Beach Gardens, FL
Mortgage Loan Consultant

I believe the biggest effect on a credit score that a borrower accomplish easily is make sure balances are not over or near the high credit limit. A revolving account that is near or over the credit available will really hurt a score, and is usually easily preventable.

Sep 23, 2015 07:20 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I think an important thing to remind people is not to pay for a FICO score report. For one thing, it won't match the FICO pulled by their lender.

Sep 23, 2015 09:38 AM
Noah Seidenberg

So true Elizabeth, I checked out my FICA score today from the online credit card bill I received.

Sep 23, 2015 12:08 PM
Beth and Richard Witt
New York, NY
The best Retired Brokers !!!!

Great coments Noah and all well deserved... Happy Day

May 12, 2016 12:43 AM
Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836

Noah, thank you for the good information presented in your post: What is a FICO SCORE and What Does it Mean to Me?  This is something people should reread periodically.

Jul 31, 2016 10:16 AM