In the world of credit, two terms often come up: FICO score and credit score. While they may sound similar, they have distinct differences, especially when it comes to building business credit. In this blog article, we will delve into the disparities between FICO score and credit score, and how understanding them can help you in your journey to establish business credit.
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What is a FICO Score?
A FICO score is a credit score developed by the Fair Isaac Corporation (FICO). It is widely used by lenders to assess an individual’s creditworthiness. FICO scores range from 300 to 850, with higher scores indicating better creditworthiness. This score is primarily based on an individual’s credit history, payment history, credit utilization, length of credit history, and other factors.
What is a Credit Score?
A credit score, on the other hand, is a broader term that encompasses various scoring models used by different credit bureaus. While FICO scores are the most commonly used credit scores, other bureaus may use their own scoring models. These scores also range from 300 to 850, with higher scores indicating better creditworthiness.
Key Differences Between FICO Score and Credit Score
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– Scoring Models: FICO scores are based on the scoring model developed by Fair Isaac Corporation, while credit scores can vary depending on the credit bureau and scoring model used.
– Weightage of Factors: FICO scores place more emphasis on payment history and credit utilization, while other credit scores may consider different factors as more important.
– Industry-Specific Scores: FICO also offers industry-specific scores, such as FICO Auto Score and FICO Bankcard Score, which are tailored to specific lending industries. Other credit scores may not have such industry-specific variations.
Importance of Building Business Credit
When it comes to building business credit, understanding the difference between FICO score and credit score is crucial. Most lenders and credit bureaus use FICO scores to assess an individual’s personal creditworthiness. However, when it comes to business credit, lenders often rely on other factors such as business credit history, financial statements, and industry-specific scores.
Building Business Credit with Better FICO
If you’re interested in learning more about building business credit, MY Better FICO is an excellent resource. They provide valuable insights, strategies, and tools to help entrepreneurs establish and improve their business credit scores. Whether you’re a startup or an established business, their expertise can guide you through the process of building strong business credit.
Conclusion
In summary, while FICO score and credit score may sound similar, they have distinct differences, especially when it comes to building business credit. Understanding these differences can help you navigate the world of credit and make informed decisions to establish and improve your business credit. If you’re interested in learning more about building business credit, check out MY Better FICO for valuable resources and guidance.