• Alliance Credit Repair


Now you might ask me why lenders need FICO?

The central reason lenders use FICO scores when making lending decisions and determining what interest rates you qualify for is to gauge the likelihood that you'll become delinquent or default on your obligations. Here is the breakdown.

Here's how the FICO scores break down as compared to a borrower becoming seriously delinquent:

Exceptional - 800 and above: Only 1 -percent of these borrowers are likely to become seriously delinquent.

Very Good - 740 to 799: About 2 percent of these consumers might become seriously delinquent.

Good - 670 to 739: Approximately 8 percent of these borrowers might become seriously delinquent.

Fair - 580 to 669: About 28 percent of people in this bracket will become seriously delinquent.

Poor - Below 580: Around 61 percent of these borrowers will become seriously delinquent.

Note: So you can see if you are a lender you have a 8% chance of someone with GOOD credit going seriously delinquent but 61% chance of someone with POOR credit going delinquent. Lenders adjust interest rates to compensate for the extra risk. Who would you rather lend your money to someone with good credit or poor credit? It's obvious to you and lenders.

Now the FICO is the most widely used broad-based risk score and the FICO score plays a critical role in billions of decisions each year. The latest US version, FICO score 9 is the most current and predictive FICO score.

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