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FICO is short for Fair Isaac Corporation, which created the FICO score. It ranks consumers by how likely they are to pay their credit obligations, enabling lenders to make informed decisions. Lenders use the FICO score to assess a loan applicant’s credit risk.

FICO scores are a key part of an individual’s credit report, and are heavily weighed by lenders deciding whether or not to extend a loan to a borrower. The borrower’s FICO score is also used when determining the interest rate of the loan.

FICO scores weigh the applicant’s payment history, current indebtedness, types of credit used, duration of credit history and new credit.

FICO scores range between 300 and 850. A score above 650 indicates a good credit history. Applicants whose scores fall below 620 usually struggle to receive loans at a favorable rate.

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