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Credit is Critical
Somewhere out there, someone is keeping tabs on you–watching how you use your credit cards, whether you pay your bills on time, and more…and they’re keeping score! It’s called yourcredit score. What it means and how it affects you are things every Biz Kid should know.
Fast Fact
FICO stands for Fair Isaac Corporation, the company that developed the models on which most credit scores are based. It was started by engineer Bill Fair and mathematician Earl Isaac in 1958. Can you guess how much they invested to start this game-changing company? Scroll down to find out!
What’s the Score?
Most scores based on the FICO model range from 350 to 850. A high score means that you are more likely to repay debts. If you have a high score, lenders are more likely to loan you money and lend it at lower interest rates. If you have a low score, borrowing will cost you more–or you might not get the credit at all.
Why All the Fuss?
Way back in the day, bankers used to sit down and talk with people who were applying for credit. The bank would make individual decisions on each loan application. That’s a friendly way to do it, but it’s very slow and very expensive. Credit scores compress lots of information about your crediworthiness into a simple number.