FICO Credit Score

You may have heard the term FICO credit score when talking to lenders about their approval requirements. You may think you already know what your FICO score is—but when the lender checks your credit, they pull a different number correctly. Who made the mistake? Quite possibly, no one did.

Your FICO credit score can differ between credit bureaus because there are three national bureaus and they are completely independent of one another. They do not share data between each other. Actually, the average person's credit score can vary up to 40 points between the three credit major credit reporting agencies. It's vital to understand all three of your FICO credit scores because when you apply for a loan or credit card, your lender can go through any one of the credit bureaus, or even a combination or all three, in order to determine your eligibility for a loan. Any inaccurate information on just one of your credit reports can lead to higher interest rates or even denial or your credit request.

Most people do not understand the significance of their FICO score. But it's important—very important. A low FICO score indicated poor credit, while a high FICO score is correlated with creditworthiness and the lowest interest rates and best loan deals.

You start building your FICO score very early in life—when you start using credit. Unfortunately, most young people do not understand the significance of credit scoring. Knowing where you stand with you FICO score is very important so that you can make financial decisions accordingly.