FICO score - is another name for Credit score. When people talk about your score, they're usually talking about the FICO score. FICO scores are the most used for credit scoring.
Where FICO came from?
Fair Isaac and Co. wrote the software in 1980s that produces scores for three main credit reporting bureaus, Experian, Equifax, and TransUnion. Hence FICO score. It is calculated using credit report data. See more detailed FICO definition.
How is it used?
FICO is used by the lenders to predict the risk that they would take by issuing you a loan. The lenders get it as a part of a credit report (they also get related credit report codes or reasons).
How often FICO is refreshed?
The bureaus normally update your credit data every month. And so a lender may get a different score from the same bureau each month.
Why Tri-merged FICO?
Your FICO score will differ at each of the above agencies and often significantly so... The reason for this is the information those agencies have on you differs... So when you buy a car, house or apply for credit card, the potential lender is likely to ask for so called tri-merged credit report from all three agencies.
Middle Score
The lender will look for a middle score. Not a medium average but just it, middle. So if you have 735 from Equifax, 672 from Experian and 690 from TransUnion, 690 it is... Which is not bad actually - you don't have to scream your lungs out: help for bad credit, please.
That brings us to the numbers game. Numbers defining Excellent, Good & oops, Bad Credit. Numbers in the terrifying FICO score range ...
How FICO affects your interest rate?
You may receive a lower rate loan or be required to produce less documentation for final approval if your score is high enough..
Is FICO all they use?
No. To make their final decisions and to define your actual interest rate, lenders use their own credit ratings that are based on combination of your current financial information and your FICO score.
