FICO Score

A FICO score is the three-digit number representing a person’s creditworthiness. It ranges from 300 to 850 and is based on your credit report. Lenders typically use an individual's FICO score to determine how likely they will be repaying borrowed funds. The name came from the Fair Isaac Corporation (FICO), which is the company behind the score’s creation.

It’s easy to use the terms FICO score and credit score interchangeably. However, there are other types of credit scores. Learn more about a FICO credit score, how it is calculated, how you can access it and strategies for improving it.

Generally, there are different types of credit scores. One of the most widely used is the FICO score, which ranges from 300 to 850. According to FICO, 90% of top lenders access FICO scores to check credit risks and make lending decisions.

Knowing your FICO score can help you better understand how lenders evaluate your loan credit application. Having a good to exceptional rating can help you gain approval on lending services such as loans, credit cards and other financing options. Conversely, a poor credit rating can lead to a loan application being denied. Lenders may also use other credit scores, which use different information and scoring formulas.

Your FICO score can have an impact on how various lenders, credit card issuers and insurance companies determine your credit risk. Lenders use it to assess how likely you can make loan payments. Credit card issuers check it to see how many on-time payments you have. Many insurance companies also use it when calculating insurance premiums.

Therefore, knowing your FICO score can help you figure out the likelihood of having your loan application approved, receiving favorable offers or determining if your insurance premiums will be higher than average.

Generally, having a credit history means you have a FICO score. FICO created software used by the three major credit bureaus — Experian, Equifax and TransUnion — to input data. Certain pieces of information from these are used to calculate FICO scores. While most consumer data metrics are similar, the information collected by these credit bureaus may differ. That is why FICO scores vary depending on which credit bureau data was used.

FICO credit scores are based solely on the credit reports that the three major credit bureaus provide. Scores are calculated on the key categories and their corresponding percentages.

There are minimum requirements you may need to calculate FICO score. These include having at least one account opened for six months or more, at least one account reported to the credit bureaus within the past six months and no deceased individuals connected with your credit account.

You can use the FICO’s estimator for an estimated score or request for your real score from myFICO.com. Staying up to date with your score can help you assess if you need to take steps to improve your creditworthiness.

A FICO score ranges from 300 to 850 and is classified into five categories. These represent an individual’s likelihood of repaying debts and their credit risks. Ranges include poor, fair, good, very good and exceptional. The lowest rating, which is poor, includes scores less than 580. Meanwhile, an exceptional rating is given to consumers with 800 to 850 FICO credit scores.

FICO updates its scoring model and releases new score versions every few years. This is to reflect changes in consumer trends and lenders’ needs. When evaluating consumers’ credit reports, lenders may use different FICO score versions. The latest version is FICO Score 10 Suite. The most widely used version is FICO Score 8. There are also industry-specific scores, such as FICO Auto Scores used for auto loans.

The FICO score is only one of the different types of credit scores. Another widely used credit score is VantageScore. VantageScore also ranges from 300 to 850. While both scores are based on credit reports, they use different scoring models. The table below identifies some of the key characteristics of the two.

Being updated on your FICO score can help you get an idea of how lenders, credit card issuers and insurance companies see your creditworthiness.

There are various ways to get your FICO score. You can buy it through myFICO.com or obtain it from an authorized FICO score retailer, such as Experian and Equifax.

FICO also has an “Open Access for Credit and Financial Counseling” program, which helps make scores more accessible to consumers. Through this program, FICO works with more than 200 financial institutions. Customers of these institutions can gain free access to their FICO scores and more than100 credit and financial counseling providers are authorized to share the scores.

Understanding your FICO score is important as it can greatly impact your finances, including loan applications and insurance premiums. MoneyGeek answers some frequently asked questions (FAQs) to help you learn more about FICO scores.

Learn more about credit and scores to help you understand what impacts your creditworthiness. The following MoneyGeek guides can help you get started.

• Best Cards to Improve Your Credit: Find the best credit card for you based on your needs. Check the top options for building or improving credit.
• What Does Your Credit Score Start At?: Learn what the usual starting credit score is, how credit scores are calculated, what the perfect credit score is and what you can do to get a better credit score.
• How Credit Union Cards Can Help Improve Credit: Find out what credit union cards are and how you can improve your creditworthiness with the help of a credit union card.
• Best Credit Cards for People With Excellent Credit: Do you have an excellent credit score? Then, this article can help you find the right credit card for you.
• How Do Student Credit Cards Work?: Starting early can help you get better credit scores in the future. Find out what student credit cards are, the different types you can choose from and how you can use one to build credit history.
• How Credit Card Interest Works: Credit card interest is the charge you get for not paying your credit card balance in full each month. Learn how to calculate credit card interest and get tips to help reduce rate charges.