Is your credit score important? Oh yes, very much so, especially if you plan on convincing a lender on planet earth to give you money. Your credit score is the foundation upon which decisions are made by mortgage lenders, Visa companies, department store credit cards and more.
Accept this as a fact of your financial life. It is not going to change.
When we’re talking about credit, we mean your FICO score. FICO stands for Fair Isaac, which came into being in 1956 with the goal to provide a standardized numerical system to let decision-makers instantly decide if they wanted to make a loan to an applicant and at what rate.
Understandably, some people are frustrated that lending decisions boil down to a single number but the idea was all about expediency. It allows lenders to make their decision in a short amount of time, which is important for most loan applicants. Like Spock said in Star Trek II, the needs of the many outweigh the needs of the few. Yes, a few people might be judged unfairly with a low FICO score when, in reality, they might be a very good risk.
Sorry. Life is not fair. You can take that bit of wisdom to the bank.
These days, the big three credit reporting agencies might even have slightly different FICO scores depending on whether or not a vendor reports to one, two, or all three. The mortgage industry usually looks at the middle score.
