In the past getting a loan in the past was not as easy as it is today. It was often a long and drawn out process, taking weeks. Worst of all, a loan offer could be unfairly based. Discriminatory lending was prevalent in the early 1900's and led to Home Mortgage Disclosure Act of 1975. This act was designed to do several things and one was to identify where discriminatory lending practices were happening. Furthermore in the past, if a person got a loan and defaulted, they might never be able to get another just based on this one mistake. Your FICO score helps prevent all of these.



The use of a credit score is a quick method of making a lending decision. It is a representation of your default risk. Its first wide use was in the 1990's to grant consumer credit which lead to the credit card boom. Seeing the effectiveness and speed to which FICO score granted credit, Fannie Mae and Freddie Mac recommended its use during mortgage lending. Since Fannie Mae and Freddie Mac are responsible for over half of the mortgages in the country, lenders quickly adopted the use of FICO scores. Today, with the use of FICO scores lending decisions can be made with in minutes. Mortgages do not take weeks they can take as little as a couple hours. This eliminates the wait time for consumers and helps them get into a home faster.

The use of a FICO score also eliminates any unfair credit decisions not based on your credit report. Things like age, gender, race, nationality, and martial status are not taken into account in your FICO score. This helps eliminate any prior personal opinions or biases of the lender. It makes for a more fair and objective evaluation of a persons credit standing and grants credit based on the facts.

Another benefit to consumers of the FICO score is the fact emphasis is put on the most recent events. So if you made mistakes with credit in the past they do not haunt you for the rest of your life. Items will even fall off your report in time. It allows people to move on from their mistakes and get a loan.

Your FICO score is a revolution in lending that is only really been in mainstream use since the 1990's. It is an ever refining formula that will continue to help not only lenders, but consumers to fast and non bias loans.