What kind of loans does a FICO score primarily help to assess?

The FICO score is a crucial factor in evaluating consumer loans, which include personal loans, credit cards, and auto loans. This score represents an individual’s creditworthiness, reflecting their credit history and behavior in repaying debts. Lenders utilize FICO scores to determine the risk associated with extending credit to individuals; a higher score generally indicates lower risk, making approval for loans more likely and often resulting in better interest rates for the consumer.

Consumer loans specifically hinge on personal credit history, which is precisely what the FICO score measures. This means that lenders are more inclined to rely on this score when assessing whether to grant a loan and at what terms, emphasizing its primary relevance to consumer lending.

In contrast, commercial loans, government-backed loans, and investment loans involve a different set of evaluation criteria that may not primarily consider individual credit scores. For instance, commercial loans often assess the business’s revenue and financial viability rather than a personal credit score. Government-backed loans may have specific criteria and protections that provide additional considerations beyond just the FICO score. Investment loans, similar to commercial loans, often focus on the property or investment's financial metrics rather than individual credit history alone. Thus, the FICO score plays a pivotal role specifically in the realm of consumer lending