The F Word
Your FICO determines your financial life. A high FICO means a higher interest rate.
A FICO score is a number based on the analysis of your credit history to determine your creditworthiness.
FICO was developed by Fair Isaac & Co., a company founded in 1956 by engineer Bill Fair and mathematician Earl Isaac.
FICO scores range between 300 and 850.
780 - 850: Excellent
720 - 799: Good
680 - 719: Average
620 - 679: Poor
550 - 619: Very Poor
549 - 350: Terrible
The lower your FICO score, the higher your interest rate. In other words, if you have good credit you will get better deals than a person that has seen more financial challenges.
When you get an interest rate on a loan that is higher than the prime rate, you are getting a subprime loan.
The practice of subprime loans has penalized people with less than stellar credit histories because these people are considered higher credit risks. However, charging people more if they have lower FICO scores can make a bad situation worse and lead to foreclosure. In essence, the subprime market causes just as many problems as it solves. |
