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Simple English definitions for legal terms
FICO
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A quick definition of FICO:
Term: FICO
Definition: FICO is a tool that helps lenders decide if someone can get a loan or credit card. It uses a number between 300 and 850 to show how good someone's credit is. The higher the number, the better the credit. People with higher scores are more likely to get a loan and pay less interest. Scores below 579 are considered bad, while scores above 800 are considered great.
A more thorough explanation:
Definition: FICO is a credit scoring model developed by Fair Isaac Corporation. Lenders use FICO scores to determine if a person qualifies for a loan, and what interest rates or credit limits they should receive. Scores range from 300 to 850, with higher scores indicating a better likelihood of getting a loan and better interest rates.
For example, if someone has a FICO score of 750, they are more likely to be approved for a loan and receive a lower interest rate than someone with a score of 600.
FICO scores are categorized as follows:
- Poor: below 579
- Fair: 580-669
- Good: 670-739
- Very Good: 740-799
- Exceptional: 800 or above
For instance, if someone has a FICO score of 800, they are considered to have an exceptional credit score and are more likely to receive the best interest rates and credit limits available.
Overall, FICO scores are an important factor in determining a person's creditworthiness and ability to obtain loans or credit.