When applying for a mortgage, it’s important to understand the difference between FICO score and credit score. A FICO score is a three-digit number that is used to determine your creditworthiness and credit risk. It is one of the most commonly used metrics by lenders to determine whether a consumer is a good candidate for a loan or not.
A credit score is also a three-digit number that is used to determine creditworthiness, but it is based on the credit history of an individual and is calculated by the credit bureaus. Knowing the difference between FICO score and credit score can help you better understand how lenders view your creditworthiness.
What is a FICO Score?
FICO stands for the Fair Isaac Corporation, the company that created the FICO score. The FICO score is a three-digit number that ranges from 300 to 850, with higher scores indicating a better credit risk. The score is based on a person’s credit history and takes into account factors such as payment history, utilization of credit, and the types of credit used.
The FICO score is used by lenders to determine a person’s creditworthiness and to assess the risk of extending a loan to that person. A good FICO score can help a person secure a loan with a lower interest rate, while a lower score may result in a higher interest rate or a loan refusal.
What is a Credit Score?
A credit score is also a three-digit number, but it is calculated and provided by the credit bureaus. It is based on an individual’s credit history and takes into account factors such as payment history, utilization of credit, and the types of credit used. The credit score can range from 300 to 850, with higher scores indicating a better credit risk.
The credit score is used by lenders to determine a person’s creditworthiness and to assess the risk of extending a loan to that person. A good credit score can help a person secure a loan with a lower interest rate, while a lower score may result in a higher interest rate or a loan refusal.
FICO Score vs Credit Score for Mortgages
When applying for a mortgage, it is important to understand the difference between FICO score and credit score. While both are used to determine creditworthiness and credit risk, they are calculated differently.
The FICO score is based on a person’s credit history and takes into account factors such as payment history, utilization of credit, and types of credit used. The FICO score is used to determine a person’s creditworthiness and to assess the risk of extending a loan to that person.
The credit score is based on an individual’s credit history and takes into account factors such as payment history, utilization of credit, and the types of credit used. The credit score is used by lenders to determine a person’s creditworthiness and to assess the risk of extending a loan to that person.
When it comes to mortgages, lenders typically use the FICO score as it is more comprehensive and provides a better assessment of a person’s creditworthiness. The FICO score takes into account a person’s credit history over the past few years, while the credit score may only reflect a person’s recent credit activity.
Final Thoughts
Knowing the difference between FICO score and credit score can help you better understand how lenders view your creditworthiness. When it comes to mortgages, lenders typically use the FICO score as it is more comprehensive and provides a better assessment of a person’s creditworthiness. Understanding how the FICO score and credit score work can help you better prepare for the mortgage process.
