Do you know the difference between your credit score vs FICO score? You’re not alone if you don’t. A lot of people don’t know the difference, or even what either of those scores mean. Your credit score is a measure of how likely you are to repay your debts, while your FICO score is the most commonly used credit score by lenders. Knowing the difference between these two scores and understanding how they impact your borrowing options is important. Let’s take a closer look at each one.
What is a FICO Score?
A FICO score is a three-digit number that rates your credit risk. It's based on information in your credit report, such as how much money you owe and how timely you have paid your bills. Your FICO score can range from 300 to 850, with higher scores indicating lower risks. You can get your FICO score for free each year at AnnualCreditReport.com. Knowing your score can help you understand where you stand financially and what steps to take to improve it if needed.
What is Credit Score?
A credit score is a three-digit number that reflects your creditworthiness. It's based on information in your credit report, which is a detailed summary of your financial history. Your credit score can affect whether you're approved for a loan, the interest rate you'll pay on a loan, and even whether you can rent an apartment. That's why it's important to understand what goes into your credit score and how you can improve it.
The Differences: Credit Score vs. FICO Score
FICO scores are created by the Fair Isaac Corporation and are used to predict how likely you are to repay a loan. Credit scores, which are regulated by the Fair Credit Reporting Act, are calculated by credit bureaus using information in your credit report.
While both scores are important, understanding the differences between them is key to taking actions that will improve your overall rating. In this post we'll take a look at what goes into each score and what you can do to make sure yours is as high as possible.
How Lenders Use Business Credit Scores vs. FICO Scores
Have you ever wondered what the difference is between your credit score and your FICO score? While both scores are important in the eyes of lenders, they use different scoring methods to measure borrowers' risk. Your credit score is based on information from your credit report, while your FICO score uses a more complex algorithm that takes into account additional factors such as your outstanding debt and payment history. Understanding the difference between these two scores can help you better understand how lenders view your risk and make decisions about lending money to your business.
Conclusion: Why Bother With Business Credit Scores?
Though your personal credit score is important, it’s not the only determining factor when it comes to lending money to a business. A business credit score can be just as important - if not more so - in securing financing for your company. Make sure you understand what goes into a business credit score and work to build up your company’s credit history and rating. It may take some time and effort, but it will be worth it in the long run.
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