Everything you need to know about the American style of credit
FICO is a credit program used by lenders and merchants who want to understand consumer behavior. For those who don’t know, Americans give a lot of importance to the payment history; it is through history that it is possible to know if a consumer pays the bills in days or has debts to pay. If a person has too many debts or pays late bills, his credit is reduced, but, if bills are paid on due date or before the due date, credits are high.
To find out if a person has good credit, creditors, people who sell products or offer services can use FICO. It’s a safe and quick way to find out if the lender should accept a consumer’s purchase. FICO shows the risks a lender can take if they sell something to someone who has a negative credit history. If your case is a low credit limit because of debt, you can take out a secure loan to get back to having positive credit, without being a risky consumer.
In this article, we are going to talk more about how FICO works for lenders who want to research customer history and for people who want to shop, but don’t have a good credit history. Pay attention to our tips to avoid taking risks during sales if you have your own business or to improve your credit if you are a consumer and want to make a purchase.
What is FICO?
As discussed at the beginning of the article, FICO is a credit program for creditors. It is a research and risk calculation tool. FICO looks at a consumer’s credit history and assesses whether the credit history is positive or negative. If so, the creditor feels confident in offering its products and services to the customer; if not, the creditor will know at the time that the customer has many debts or delays payments, in such cases creditors prefer not to offer their products and services.
I am creditor
If you are a creditor, then before using FICO it is necessary to understand what your case is: do you own a business or do you offer a service? It is much easier for lenders who sell products to manage their credit history, because they are able to access credit from customers’ previous purchases. For those offering a service, it may be more difficult, but it can also be based on purchase history. The important thing is to calculate exactly the risk that a purchase can bring you and avoid financial losses.
I am a consumer
If you are a consumer, then you need to preserve your credit history. If a person has negative credit, then stores will hardly accept that these consumers are their customers. It is important to manage all your purchases, so, in case of unpaid bills or interest on debts, it is a priority that these debts are settled. Only after all debts are paid will your credit return to positive and, perhaps, start to increase.
In this article, we covered how the FICO credit program works for lenders and consumers. We also discussed options to improve and increase the credit limit in the market. Regardless of your case, creditor or consumer, FICO can assess what risks you take. Then, if you’re selling something, you need to know exactly if it’s going to have a positive or negative return; if you are buying something, you need to know if your credit is positive in the market to make that purchase.