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What is a FICO score?

Find out how lenders evaluate your creditworthiness — and credit risk — with these three digits.

If you’re hoping to secure a loan, credit card or mortgage, it’s worth knowing how potential creditors might gauge whether you’re a good fit. One factor in their decision is your FICO score — a three-digit number that reflects your creditworthiness.

Your FICO score paints a picture of your financial behavior, and the higher your score, the better your position as a responsible credit user.

What is a FICO score?

Named after its inventor, the Fair Isaac Corporation, a FICO score is a three-digit number that lenders use to determine your credit risk. In use since 1989, today around 90% of lenders and credit card issuers consider your FICO score before agreeing to extend credit. It’s also used to set the interest rates you’ll pay.

FICO runs data in your credit reports through a proprietary algorithm to calculate your FICO score. And you don’t have just one FICO score: FICO employs multiple models and algorithms to come up with some 50 scores specific to auto loans, credit cards, mortgages and more.

Generally, your FICO score ranges from 300 to 850. The higher your number, the less risk you present to lenders.

FICO the company is focused on “predictive analytics” — a fancy way of saying that it analyzes information to predict how you’re likely to behave. In that way, your FICO score gives lenders insight into whether you’re able to pay bills on time, handle larger lines of credit and keep balances low.

How is a FICO score calculated?

To determine your FICO score, credit reporting agencies consider five main factors:

  • Payment history — 35%. If you make timely payments on your debts and loans, you’re looked on more favorably. Late payments can ding your score significantly, especially after the 60-day mark.
  • Debt-to-credit utilization — 30%. How high is the balance on each of your lines of credit? Most experts will tell you to keep your credit utilization at less than 30% of your limit.
  • Length of credit history — 15%. A longer credit history can boost your score, as it proves you are a responsible credit user.
  • Credit mix — 10%. Do you have a combination of credit accounts, like credit cards, loans, mortgages and retail store credit cards? A mix of loans and revolving credit — like a credit card — can enhance your score.
  • New credit — 10%. New accounts require hard inquiries on your report, which can hurt your score for up to six months. Many new applications could also indicate to a lender that you’re desperate for credit.

As you can see in this breakdown, on-time payments and low credit balances account for two-thirds of your FICO score.

What’s not included in your FICO score?

When crunching your credit score, FICO assesses a huge range of information. But it excludes:

  • Personal details, like your race, religion, nationality, gender, marital status and age.
  • Employment information, including your salary, title, occupation and employer.
  • Where you live.
  • Whether you participate in credit counseling programs.
  • Soft credit checks, including requests you’ve made to see your own score.
  • Interest rates on your credit accounts.

What’s considered a good FICO score?

FICO scores range from a low 300 to a perfect 850. A higher number tells lenders that you’re a less risky borrower, resulting in a higher likelihood of approval, low rates and flexible terms.

Lenders uphold standards that vary across loan types and the company you’re working with, though you can get an idea of how you’re viewed using broad rating categories.

RatingHow credit issuers see your scoreFICO score range
PoorYou’re likely to miss payments and face court judgments, insolvency or bankruptcy in the next year.300–579
FairYou might face a default, bankruptcy or another credit issue in the next 12 months.580–669
GoodYou’re less likely to miss a payment, face a judgment against you or declare bankruptcy.670–739
Very goodYou’re likely to maintain healthy credit, and you probably won’t run into credit trouble in the next year.740 and higher

You have more than one FICO score

Each of the three main credit bureaus — Equifax, Experian and TransUnion — keeps a different credit file on you and uses a unique algorithm to calculate your credit score. As a result, your score varies slightly depending on which agency your potential lender uses.

FICO itself also produces different types of FICO scores. They’re industry-specific models for credit cards, car loans and mortgages, some ranging from 250 to 900. If you’re applying for a car loan, your lender may look at the score that reflects your history of making auto loan payments.

Finally, there are a few FICO formulas that pull data from different sources. FICO 8 is the most widely used, but FICO 9 is the newest version. Typically, mortgage lenders lean toward older versions.

5 ways to see your credit score

To check your credit score for free, take one of these routes:

  1. Check with your credit card. Citibank, Chase, American Express, and many other providers offer free access to your FICO score either on monthly statements or online. The score may not be your true FICO score, but it’ll give you an idea of your overall creditworthiness.
  2. Sign up for a free service. Discover Credit Scorecard and CreditWise from Capital One present important factors of your creditworthiness through a dashboard, including a credit score. And you don’t have to be a customer.
  3. Ask a credit union. Some credit unions grant members access to free FICO scores. These include the Digital Federal Credit Union and the Pennsylvania State Employees Credit Union.
  4. Call your lenders. If you’ve signed or cosigned a student loan with Sallie Mae Smart Option or financed your car through a company like Ally Financial, you’re eligible to see your FICO score.
  5. Credit counselors. Are you participating in credit counseling? As part of the service, you’re entitled to your FICO score for free.

None of these options will affect your credit score.

FICO score vs. VantageScore

Both FICO and VantageScore scoring models are used by the three major credit bureaus, and both produce a score ranging from 300 to 850. But while they consider a lot of the same information, they collect their data differently.

FICO’s formula is based on the credit reports of millions of consumers from the three credit bureaus. It analyzes this data to generate a scoring model. Introduced in 2006, VantageScore, however, was developed by Equifax, Experian and TransUnion themselves. It uses those files to come up with a single formula.

Which score will be used?

The score you use comes down to your consumer credit history. To get a FICO score, you need a credit history of at least six months and at least one account reported to a credit reporting agency within the past six months.

If you don’t, that’s when VantageScores step in: They’re often given to those who don’t qualify for a FICO credit score thanks to a scant or nonexistent credit history. They require one month of credit history only with one account reported to an agency in the past two years.

Other differences lie in how each model treats factors like late payments. For example, VantageScore penalizes late mortgage payments more harshly than other types of credit. FICO uses a 45-day span for hard inquiries, while VantageScore only focuses on the past 14 days.

Lenders can take advantage of both scores. They might use VantageScore to send out preapproval offers and a FICO score to determine which applications to approve.

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Bottom line

Loans are a game of risk. To counter that risk, potential lenders and creditors leverage your FICO score and other tools designed to analyze — and therefore predict — your future financial behavior.

A high FICO score indicates to lenders that you’re responsible with credit, giving you a better chance of securing a loan, credit card or mortgage at strong rates and terms.

To learn more about your credit, read our guide on credit scores.

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