FICO Score
Definition
The most common credit score used by lenders, created by Fair Isaac Corporation. Ranges from 300-850. Based on payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit (10%). Essentially a numerical measure of how trustworthy you are with borrowed money.
Why It Matters
Your FICO score determines if you get approved for loans and what interest rates you'll pay. It impacts more than just loans — insurance companies, employers, and landlords sometimes check it. A 100-point improvement can save thousands on a mortgage.
Example
FICO of 800+: qualify for best rates (3% mortgage). FICO of 700-749: good but not best (4.5% mortgage). FICO below 620: likely rejected or offered 8%+ rates. Building credit takes time but the payoff is massive.