By: Kevin Thompson

It can be the most offensive, disturbing, and obscene word; yet to some, it can be perfect, excellent, and amazing. You are probably wondering by now if I am speaking about the word you were thinking of, and the answer (depending on some of you), can be yes or no. Well, I am talking about F.I.C.O. The Fair Isaac Corporation independent credit rating, or credit score, is the ‘F’ word of the day.

By now, some of you want to hide in a corner just thinking about your FICO score and some of you feel pretty confident about it. Whichever may apply, one thing is certain and that is; our FICO is the standard and precedence for our everyday lives, yet we know so little about it. You may be thinking, what is there to know? It’s either good, bad, or in-between. However, there’s more to FICO than just a number and unless you fully understand its purpose and place in your life, it can become a living nightmare or an underachieved glory. So, what does that mean? And, why should you care?

What is a FICO score?

The Fair Isaac Corporation defines your FICO score as “predictive analytical solutions that drive smarter decisions” and “the use of mathematics to predict consumer behavior”. A lot of fancy words that does not make much sense; but, to simplify, it means that you (the consumer) have been assigned a number (FICO score) that tells everyone else how great of a risk you are in financial responsibility. So, the higher your FICO number, the less of a risk you are; and in kind, the lower your FICO number, the greater the chances of you being a hazard. A pretty simple concept, won’t you agree?

What does that mean to me?

Well, for one, good or bad credit and debt management reflects strongly of your character. Not only that, this ‘F’ word comes with a pretty high price tag. Secondly, it can make or break you and determine whether or not you are a benefit or burden to our social responsibility. Your FICO goes way beyond being approved for a credit card and has now been the major factor in purchasing a home, starting a business, and even getting a job, yes, a job! Finally, FICO is more than just a word, it is an identity! Your identity to be exact, and the less you know about it, the lesser your options are to achieving financial freedom.

Why should you care?

It’s not about how high or low your score is, it is what you do with it that matters most. Some of your may say: But, I have excellent credit, why should I be worried?  You may not share the same concerns but having excellent credit means nothing without the knowledge of its power. What purpose does it serve to have a “perfect sore” and not know the full benefits and rewards that come with it? In the same manner, how do you expect to truly be “credit worthy” or “debt free” if you cringe, hide, and avoid the issue of your poor fiscal stewardship (credit/debt management).

What can you do?

Whether you are in great credit standing or not, there are a few things that you can do in order to improve or enhance your current position. To get started, here are three best practices to assist you in successfully managing your credit:

1)      Get a recent copy of your credit report from all three credit bureaus (Equifax, TransUnion, and Experian). It is important to know what each report says about you because they may all reflect different reporting activity. Keep an eye out for any suspicious activity as you may be subject to identity theft or other fraudulent activity. You can get a TRUE free report at: www.annualcreditreport.com. (There will be no credit card required for this service).

2)      Sign up for a credit monitoring service that will help you keep track of your daily credit activities. This will NOT be a free service. So, do your research because each company may offer different features and benefits that you may find useful.

3)      Finally, take an online class or tutorial about the benefits of managing your credit and debt. To know better is to do better!

Whatever the current scenario of your credit profile, it is most advantageous to have a sound understanding of what your FICO says about you. In essence, we can determine that FICO is not just any four letter ‘F’ word and that it is probably the most profound word in meaning and context (or arguably so), but more importantly, your FICO score is a reflection of you and a projection to the world of your true character. It is a distinction amongst the haves and have not’s; and the foundational element of your legacy and inheritance. It is you and you cannot see it in any other way.