What is a FICO® Score?

Whether you’re new to credit or have been borrowing money for years, you’ve probably seen the term FICO® Credit Score, but you may not know what it means. Knowledge of the basics of your score and how it affects your credit will help you manage your credit. Here’s what you need to know about FICO® Scores.¹

What are FICO® Scores?

The Fair Isaac Corporation (FICO) creates your credit score using three-digit numbers based on the information on your credit report. Your FICO® Score summarizes your credit history into a single number that moneylenders can use to figure out if you’re a good borrower (your credit risk). Most FICO® Scores fall within a 300–850 score range. Lenders consider higher FICO® Scores lower risk, and lower FICO® Scores higher risk. There is no single minimum FICO® Score used by all lenders to qualify you for a loan, but in general higher FICO® Scores can put you in a better position to get credit—and on better terms.

What impacts your FICO® Credit Scores?

FICO calculates your credit score based on these five key categories from your credit report and is typically based on the percentages below:

1. 35% of your score is based on payment history.
2. 30% is based on amounts you owe.
3. 15% comes from the length of your credit history.
4. 10% represents new credit.
5. 10% is based on your credit mix.

The importance of these categories may vary for different FICO® Credit Score versions. 

FICO® Score versions

The most recent FICO®Score is FICO®Score 10, but many lenders continue to use previous versions.

FICO® Score 8

FICO® Score 8 assesses credit utilization more heavily and is more forgiving of one-off late payments compared to previous versions. FICO® Score 8 includes Auto and Bankcard versions that help lenders make more informed credit granting decisions for auto loans and credit card applications.

FICO® Score 9

FICO®Score 9 reduces the negative impact of medical debt and paid offed third-party collections on your credit file. This version also looks at reported rental payments when calculating your FICO®Score. FICO® Score 9 also has two industry-specific versions, Auto and Bankcard, that help lenders make more informed credit granting decisions for auto loans and credit card applications.

FICO® Score 10

FICO® Score 10 is the newest version of the FICO®Score. The FICO®Score 10T version looks at your payment and debt history for the previous 24-plus months to help calculate your score.

What is a FICO® Score used for?

Credit issuers use FICO® Credit Scores to see if they should give you credit, and what interest rate to offer you.

Why FICO® Scores are important?

Your FICO® Scores are important because lenders use these scores to predict how likely you are to pay back your debt. These scores give an unbiased look at your credit based on your actual borrowing and repayment history.

While your score is just one factor credit issuers may use in a lending decision, it may impact all of your credit, like credit card interest rates, mortgages, and car loans. But it’s important to note that how each lender uses your FICO® Score may be different.

Can you get a perfect FICO® Score?

It’s possible to achieve a perfect FICO® Score of 850–in fact almost 3 million people do. However, you don’t need a perfect score to get credit at the best terms or with the lowest interest rates.

What is a good FICO® Score?

What’s considered a good FICO®Score may differ from one credit issuer to another. Our credit score chart will give you an idea of how good your FICO® Score is.

FICO® Score vs. Credit Score

90 percent of top lenders in the United States use FICO® Credit Scores in their lending evaluation process, but there are different credit scores called educational scores. These credit scores do not use the same calculations as the FICO® Score, so educational scores may differ from FICO® Scores.

Why are FICO® Scores sometimes different?

It’s important to understand that a credit score is based on your credit report at that credit bureau at the time the score is requested. Your credit file may not be the same at each bureau. So, you may see different FICO® Scores at each of the three major credit bureaus (TransUnion, Equifax, and Experian).

Understanding how your FICO® Credit Score works may help you make sense of changes in your credit score, alert you to possible errors on your credit record, and encourage you to think about how your borrowing behavior may impact your credit score and future borrowing situation.