What is a FICO score and who cares anyway? FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score. Your FICO score tells lenders how good you have been paying your bills. The more credit cards and loans you have the higher potential for your FICO score. However if you miss a payment it could damage your FICO score. When you go to buy a car or a house the first thing a lender does when performing a preapproval is run your credit.
Depending on the type of loan you will need to have minimum FICO score. For instance, if you are applying for a FHA loan you will need to have a minimum FICO score of 640. If you are trying to get conventional financing your score will have to be at least 660 and some lenders will require 680. One of the most important things to remember is paying your bills on time will save you money. When you are not late in paying your bills it has a positive affect on your FICO score. You may qualify for a FHA loan with a 640 FICO score but your interest rate will be higher than if your score was 680. This will cost you big money over the life of the loan. So remember, not missing a credit card payment does not only raise your FICO score it also saves you money when you need it the most for a car or home loan.
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