So, you’ve probably heard the term but do you really know what a FICO score is?

FICO stands for “Fair Isaac Coorporation Company”. It is a software for calculating credit scores and is the considered the standard in the finance industry.

FICO is typically accepted as the best, most accurate way to rate an individual’s credit score. This is the reason why many simply use the phrase “FICO score” instead of “credit score”.

So how is your FICO score calculated? In a nutshell, your credit rating is determined based on your credit history. Credit bureaus look at that data and attempt to determine risk as it relates to people’s ability to repay debt. The higher the potential risk, the higher the interest rate you’ll ultimately be charged.