What is a FICO score and why is it important?

A FICO score is a three-digit number that represents an individual's creditworthiness. It predicts the likelihood of someone repaying their debts on time based on their credit history. This score is widely used by lenders, banks, and credit card companies to determine whether to approve a loan application and what interest rate to offer. It helps them assess the level of risk associated with lending to a particular individual. A higher FICO score indicates a lower credit risk, making it easier to secure favorable loan terms and rates. A good score also increases eligibility for credit cards, mortgages, and other financial opportunities. It is crucial to pay attention to your FICO score as it affects your overall financial health, enabling you to make more informed borrowing decisions and ultimately save money.