Any smart business owner has their credit checked and knows their FICO score before they start purchasing merchandise or looking at lending options. They know what their score is and what it concretely means regarding their ability to manage credit or take out a loan.
Having an accurate FICO score is vital for success, but you can’t succeed if you don’t understand the differences between your credit vs FICO score.
Let’s go over the differences between a FICO score and a credit score. Read on!
What Is a Credit Score?
A credit score is a measure of a person’s creditworthiness. The three major credit bureaus – Equifax, Experian, and TransUnion – use different scoring models.
Your credit score determines your eligibility for loans, mortgages, car loans, and other types of credit.
What Is a Fico Score?
A FICO score is a credit score used by lenders to decide whether to offer you credit. A high FICO score indicates that you’re a low-risk borrower, while a low FICO score means you’re a higher-risk borrower.
What Are the Differences Between a Credit Score and a FICO Score?
A credit score is a numerical measure of your creditworthiness. It ranges from 300 to 850, with higher scores indicating a lower risk of default. A FICO score is a similar but more comprehensive credit rating that considers your payment history, debt load, and other factors.
A good credit score is essential if you want to borrow money or take out a loan. A bad credit score can lead to decreased lending opportunities and even higher loan interest rates.
It also measures your ability to repay creditors in the future. A FICO score looks at your current repayment history and considers other factors, such as how much debt you have and how long it has been outstanding.
A credit score is based on information reported by lenders. A FICO score is generated using data from various sources, including banks, insurance companies, and others who lend money to consumers.
The range for a good credit score varies depending on the lender. For example, a median credit score for loans ranging from $5,000-$30,000 is 700-850, while scores above 850 are generally desirable for mortgages and other significant financial commitments.
For more details regarding the guide on credit scores and fico scores, visit this link: https://www.nav.com/business-credit-scores/.
Learn the Differences Between a Credit vs FICO Score Today
A credit score is a numerical representation of your creditworthiness, while a FICO score is a specific type of credit score.
The main difference between credit vs FICO score is that a credit score is one part of your credit report, while a FICO score is a calculation based on the information in your credit report. However, both are used by lenders to evaluate your creditworthiness.
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