About FICO® Scores
- What is FICO® ?
- What are FICO® Scores?
- How are FICO® cores different?
- What goes into FICO® Scores?
- What is left out of FICO® Scores?
- What is a good FICO® Score?
- What are score factors?
- What are the minimum requirements to calculate a FICO® Score?
- How can FICO® Scores help me?
- Do I have more than one FICO® Score?
- Why is my FICO® Score different than other scores I have seen?
- Why do FICO® Scores fluctuate/change?
FICO®, formerly known as Fair Isaac Corporation, is the company that invented FICO® Scores. Starting in the 1950s, FICO sparked a revolution in credit risk assessment by pioneering credit risk scoring for credit grantors. This new approach to measuring risk enabled banks, retailers and other businesses to improve their performance and to expand consumers’ access to credit. Today, FICO® Scores are widely recognized as the industry standard for measuring credit risk.
It is important to note that while FICO works with the consumer reporting agencies to provide your FICO® Scores, it does not have access to or store any of your personal data or determine the accuracy of the information in your credit file.
FICO® Scores are the most widely used credit scores. Each FICO® Score is a three-digit number calculated from the data on your credit reports at the three major consumer reporting agencies—Experian, TransUnion and Equifax. Your FICO® Scores predict how likely you are to pay back a credit obligation as agreed. Lenders use FICO® Scores to help them quickly, consistently and objectively evaluate potential borrowers’ credit risk.
Not all credit scores are FICO® Scores. Because FICO® Scores are the credit scores most widely used by lenders—FICO® Scores are used in over 90% of U.S. credit lending decisions1—knowing your FICO® Scores is the best way to understand how potential lenders could evaluate your credit risk when you apply for a loan or credit. Other credit scores, which use scoring formulas different from FICO’s, may not give you an accurate representation of the scores your lender uses when assessing your credit profile.
FICO® Scores are calculated from the credit data in your credit report. This data is grouped into five categories; below is a detailed breakdown of the relative importance of each category. As you review this information, keep in mind that:
- FICO® Scores take into consideration all of these categories, not just one or two.
- The importance of any factor (piece of information) depends on the information in your entire credit report.
- FICO® Scores look only at the credit-related information on a credit report.
- FICO® Scores consider both positive and negative information on a credit report.
1 Mercator Advisory Group, Analysis, 2018
- Payment History - Approximately 35% of a FICO® Score is based on this information:
- Payment information on many types of accounts:
- Credit cards
- Retail accounts
- Installment loans
- Finance company accounts
- Bankruptcy and collection items
- Details on late or missed payments (“delinquencies”), bankruptcies, and collection items
- Number of accounts that show no late payments, or are currently paid as agreed
- The Amounts You Owe - Approximately 30% of a FICO® Score is based on this information:
- Amount owed on all accounts
- Amount owed on different types of accounts
- Balances owed on certain types of accounts
- Number of accounts which carry a balance
- How much of the total credit line is being used on revolving credit accounts
- How much is still owed on installment loans, compared with the original loan amounts
Credit utilization is one of the most important factors evaluated in this category, considers the amount you owe compared to how much credit you have available. While lenders determine how much credit they are willing to provide, you control how much you use. FICO’s research shows that people using a high percentage of their available credit limits are more likely to have trouble making some payments now or in the near future, compared to people using a lower level of available credit.
Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower with a low FICO® Score. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit.
- Length of Credit History - Approximately 15% of a FICO® Score is based on this information:
In general, a longer credit history will increase a FICO® Score, all else being equal. However, even people who have not been using credit long can get a good FICO® Score, depending on what their credit report says about their payment history and amounts owed. Regarding length of history, a FICO® Score takes into account:
- How long credit accounts have been established. A FICO® Score can consider the age of the oldest account, the age of the newest account and the average age of all accounts.
- How long specific credit accounts have been established.
- How long it has been since you used certain accounts.
- New Credit - Approximately 10% of a FICO® Score is based on this information:
FICO’s research shows that opening several credit accounts in a short period of time represents greater risk—especially for people who do not have a long credit history. In this category, a FICO® Score takes into account:
- How many new accounts have been opened.
- How long it has been since a new account was opened.
- How many recent requests for credit have been made, as indicated by inquiries to the consumer reporting agencies.
- Length of time since inquiries from credit applications were made by lenders.
- Whether there is a good recent credit history, following any past payment problems.
Looking for an auto, mortgage or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. In general, FICO® Scores compensate for this shopping behavior in the following ways:
- FICO® Scores ignore auto, mortgage, and student loan inquiries made in the 30 days prior to scoring, so the inquiries won’t affect the scores of consumers who apply for a loan within 30 days.
- After 30 days, FICO® Scores typically count inquiries of the same type (i.e., auto, mortgage or student loan) that fall within a typical shopping period as just one inquiry when determining your score.
- Types of Credit in Use - Approximately 10% of a FICO® Score is based on this information:
FICO® Scores consider the mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and it is not a good idea to open a credit account you don’t intend to use. In this category, a FICO® Score takes into account:
- What kinds of credit accounts are on the credit report? Whether there is experience with both revolving and installment accounts, or has the credit experience been limited to only one type?
- How many accounts of each type exist? A FICO® Score also looks at the total number of accounts established. For different credit profiles, how many is too many will vary depending on the overall credit picture.
FICO® Scores consider a wide range of information on a credit report. However, they do NOT consider:
- Race, color, religion, national origin, age, sex and marital status
- Salary, or other employment information (however, lenders may consider this information separately)
- Where the consumer lives
- Any interest rate being charged on a credit card or other account
- Any items reported as child/family support obligations
- Certain types of inquiries
- Any information not found in the credit report
FICO® Scores generally range from 300 to 850, where higher scores demonstrate lower credit risk and lower scores demonstrate higher credit risk (note: some types of FICO® Scores have a slightly broader range). What’s considered a “good” FICO® Score varies, since each lender has its own standards for approving credit applications, based on the level of risk it finds acceptable. So one lender may offer its lowest interest rates to people with FICO® Scores above 730, while another may only offer it to people with FICO® Scores above 760.
The chart below provides a breakdown of ranges for FICO® Scores found across the U.S. consumer population. Again, each lender has its own credit risk standards, but this chart can serve as a general guide of what a FICO® Score represents.
What FICO® Scores in this range mean
800 or Higher
740 to 799
670 to 739
580 to 669
Lower than 580
FICO’s research shows that people with a high FICO® Score tend to:
- Make all payments on time each month
- Keep credit card balances low
- Apply for new credit only when needed Establish a long credit history
Score factors are delivered with a consumer’s FICO® Score, these are the top areas that affected that consumer’s FICO® Scores. The order in which the score factors are listed is important. The first factor indicates the area that most affected the score and the second factor is the next most significant influence. Addressing these factors can benefit the score.
A credit file must contain these minimum requirements (Note: The requirements vary slightly for FICO® Scores NG):
- At least one account that has been open for six months or more
- At least one account that has been reported to the consumer reporting agency within the past six months
- No indication of deceased on the credit file (if you shared an account with a person reported as deceased, it is important to check your credit file to make sure you are not affected)
A FICO® Score gives lenders a fast, objective and consistent estimate of your credit risk. Before the use of credit scoring, the credit granting process could be slow, inconsistent and unfairly biased. Keep in mind that FICO® Scores are only one of many factors lenders consider when making a credit decision. Here’s how FICO® Scores may benefit you.
Get credit faster - FICO® Scores can be delivered almost instantaneously, helping lenders speed up credit card and loan approvals.
Unbiased credit decisions - Factors such as your gender, race, religion, nationality and marital status are not considered by FICO® Scores. When a lender uses your FICO® Score, they’re getting an evaluation of your credit history that is fair and objective.
May save you money - A higher FICO® Score can help you qualify for better rates from lenders—generally, the higher your score, the lower your interest rate and payments.
More credit available - Because FICO® Scores allow lenders to more accurately associate risk levels with individual borrowers, they allow lenders to offer different prices to different borrowers. Rather than making strictly “yes-no” credit decisions and offering “one-size-fits-all” credit products, lenders use FICO® Scores to approve consumers who might have been declined credit in the past. Lenders are even able to provide higher-risk borrowers with credit that they are more likely to be able to manage.
To keep up with consumer trends and the evolving needs of lenders, FICO periodically updates its scoring model, resulting in new FICO® Score versions being released to market every few years. Additionally, different lenders use different versions of FICO® Scores when evaluating your credit. Auto lenders, for instance, often use FICO® Auto Scores, an industry-specific FICO® Score version that’s been tailored to their needs.
There are many different credit scores available to consumers and lenders. FICO® Scores are the credit scores used by most lenders, and different lenders may use different versions of FICO® Scores. In addition, FICO® Scores are based on credit file data from a consumer reporting agency, so differences in your credit files may create differences in your FICO® Scores.
There are many reasons why a score may change. FICO® Scores are calculated each time they are requested, taking into consideration the information that is in your credit file from a consumer reporting agency at that time. So, as the information in your credit file at that CRA changes, FICO® Scores can also change. Review your key score factors, which explain what factors from your credit report most affected a score. Comparing key score factors from the two different time periods can help identify causes for a change in a FICO® Score. Keep in mind that certain events such as delinquent payments or bankruptcy can lower FICO® Scores quickly.
FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.
Redwood Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Redwood Credit Union and Fair Isaac do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating.
FICO® Score and associated educational content are provided solely for your own non-commercial personal review, use and benefit.