What Is Your FICO Score Used For

Your FICO score is used for a variety of purposes. Among those that use your credit rating are not-so-surprising snoopers, like lenders and creditors. However, you might be surprised that employers and landlords are also interested in your credit score.

What is your FICO score used for?

Basically, a credit rating is a way for others to see how you handle debt. Do you pay it off on time? Are you responsible? What sort of risk do you pose? The lower your credit score, the higher risk you are. And many decisions that directly affect your life and your financial situation are made based on your FICO score. If you are high risk, then you are less likely to get the best deals and the best treatment. A high credit rating that accompanies low risk, however, will help you.

Creditors and lenders and your credit score

You expect that when you go in for a loan, or when you apply for a credit card, your credit rating will be checked. Creditors and lenders use your FICO score to decide whether to give you a loan, and then use it to determine your limit and your interest rate. The less of a risk you pose (the higher your credit score), the more likely you are to get good terms. And that can save you thousands in interest charges and other fees.

Surprising people who want your credit rating

Many people are surprised to learn that a FICO score has impact on such things as employment and housing. Indeed, many employers, especially in terms of the security industry, are interested in your credit score. After all, if you have a great deal of debt you might be susceptible to taking bribes, or even to embezzling. And landlords are increasingly running credit checks on potential tenants. If you are high risk (with a low FICO score), then you may have to pay a higher security deposit, or even be unable to rent altogether. No landlord wants to be constantly chasing down the rent or taking the chance that your debt situation will force you to flee without paying.

Your credit score is important to your finances. And, as you can see, nowadays your FICO score affects more than just loans and credit cards. Your credit rating can also affect your ability to find work and housing. This means that maintaining good credit should be a main focus of your financial planning, and you should try to keep on top of debt.