What does the FICO score represent?

The FICO score is a representation of a credit scoring system that evaluates an individual's creditworthiness based on their credit history and financial behavior. It synthesizes various factors, including payment history, amounts owed, length of credit history, types of credit utilized, and new credit, into a three-digit number that typically ranges from 300 to 850. This score is crucial for lenders, as it helps them assess the risk of lending money or extending credit to an individual. A high FICO score indicates responsible credit management and lowers the perceived risk for lenders, potentially leading to better loan terms and interest rates for borrowers. Understanding the significance of the FICO score is essential for anyone involved in real estate transactions, as it can impact mortgage eligibility and financing options.