FICO is short for Fair Isaac Corporation, named after the organization that created the method on how your credit rating is scored. There are three FICO scores used by three US credit reporting agencies: Experian, Equifax and TransUnion.
FICO scores range from 300 (the worst) to 850 (the best). This score is more than just a number. It has a direct bearing on how much credit a lending company will give you, as well as the terms. The number is used to determine how risky it is to lend you money and will affect the interest rate. In fact, 90% of top lenders use it in their lending decisions.
There are other factors that will affect your ability to borrow money, but in general:
- The lower your number, the more of a credit risk—the higher your interest rates
- The higher the number, the less of a credit risk—the lower the interest rate
This means that your FICO score holds a tremendous amount of influence over your ability to apply for things like:
- A credit card
- Home mortgage
- Property rental
- Car loan
The good news is that your FICO score is not permanent. It will change over time and you can improve it. However, it won’t be a “quick-fix” process. Paying bills on time (and consistently), keeping your balances on existing credit cards low, and avoiding opening new credit card accounts can all help you raise your FICO score.
If you are a structured settlement or prize payment annuitant, however, there are ways to receive cash quickly if you are in a tough financial spot and your FICO score is low. If you receive structured settlement or lottery payments, you may qualify for a cash advance through SenecaOne. The criteria for a cash advance doesn’t involve FICO scores so your credit rating has no impact on receiving a cash advance.