FICO is “COLD”….And Justifiably So?

FICO is a credit scoring system developed by Fair, Isaac and Company and has become the industry standard in the credit world. Lenders use FICO because it gives them a consistent, data based evaluation of a credit file and it’s fast. In the past, manual underwriting was the norm and that could take up to 2 weeks to get an approval or denial. So with the “drive through” mentality of our society, personality has been taken out of the formula.

FICO is objective. It measures the same items on every credit report in accordance to consistent and stringent guidelines, so the lenders know that every applicant’s score is measured by the same criteria. FICO scores range from 300 to 850. The higher the score the better the credit risk.

Lenders then use these scores to place consumers into scoring ranges to determine what financing programs will be offered to these different groups. The riskier groups – lower scores - will pay higher interest rates.

For example a person purchasing a $25,000 vehicle with a 740 score would pay around $747 a month over a 36 month term as compared to an individual with a 650 who could pay $828 a month. Because the lower scored individual falls into a lower scoring range they would pay a higher interest rate and have the “privilege’ of paying an additional $4,384 for the same vehicle.


Therefore, because FICO is “COLD” (objective and dynamic) and is completely based on the information contained in your credit reports, any negative inaccuracies that can be eliminated from your credit reports prior to presenting yourself for financing will have an immediate impact on what you end up paying for your purchase.

Before you make a major purchase please go to and get your free annual report and take advantage of our complimentary review to ensure that everything on your report is correct, verifiable and timely. As is evident above, this one move could save you Thousands of $’s.

Have a great week!


Author's Bio: 

About the Author - Kim Carpentier is Owner and General Manager of Valley Credit Builders ( He is using his 35 years of successful business ownership, and transition, to help small business owners build business credit so they can separate the financial responsibilities between business and personal credit.He specializes in helping business owners establish excellent business credit scores and then leverages those scores to access cash and credit for their businesse,s without their personal guarantees. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today. 978-886-7805