How FICO Scores Help You

FICO scores give lenders a fast, objective measurement of your credit risk.
Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased. Credit scores and especially FICO scores, the most widely used credit scores, have helped improve the credit granting process. Because of FICO scores:

  • People can get loans faster. FICO scores can be delivered almost instantaneously which helps lenders speed up loan approvals. This means that when you apply for credit, you'll get an answer more quickly. FICO scores also enable retail stores, internet sites and other creditors to make instant credit decisions.

  • Credit decisions are fairer. Using FICO scores, lenders can focus only on the facts related to credit risk, rather than their personal opinions or biases. Factors such as your gender, race, religion, nationality and marital status are not considered by FICO scores.

  • Older credit problems count for less. If you have had poor credit performance in the past, your FICO score can improve. The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report.

  • More credit is available. The use of FICO scores gives lenders the confidence to offer credit to more people because they have a better understanding of the risk they are taking on. FICO scores may help lenders identify individuals who are likely to perform well in the future even if their credit report shows past problems. However, some lenders have their own separate guidelines and niche programs so you may still qualify for a loan with a low FICO score.

  • Credit rates are lower overall. With more credit available, you may pay less. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders and this should make it easier for borrowers to obtain credit at favorable terms. Mortgage rates are lower in the United States than in many other countries partly because of the information, including FICO scores, available to lenders here.