What is a Good FICO® Credit Score?

Whether you’re new to credit or have been borrowing money for years, you’ve probably seen the term FICO® Credit Score, yet you may not be sure of what it means. Understanding the basics of your score and how it impacts your credit may help you better understand lender decisions, and help you make wiser choices when it comes to managing your credit and setting useful financial goals. Here’s what you need to know about FICO® Scores.¹

What is a FICO^® Credit Score?

FICO® Scores are three-digit numbers based on a mathematical formula created by the Fair Isaac Corporation (FICO), and are calculated using the credit information on your credit report at a consumer reporting agency (CRA) at a particular point in time. Your FICO® Score summarizes information in your credit report into a single number that lenders can use to assess your credit risk quickly, consistently, objectively and fairly.

FICO® Scores most often fall within a 300–850 score range, and higher FICO® Scores are considered lower risk, while lower FICO® Scores indicate 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 qualify for credit or better terms.

What impacts your FICO^® Credit Scores

FICO® Scores are calculated based on these five categories of information from the consumer’s credit report:

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 the mix of credit in use

The importance of these categories may vary for different credit profiles.

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 relies more on credit utilization and is more forgiving of one-off late payments compared to previous versions. FICO® Score 8 has two industry-specific versions, Auto and Bankcard, that further help lenders determine a FICO® Score for auto loans and credit card accounts respectively.

FICO^® Score 9

FICO® Score 9 reduces the negative impact of medical debt and paid offed third-party collections. It also considers reported rental payments when calculating your FICO® Score. FICO® Score 9 also has two industry-specific versions, Auto and Bankcard, that further help lenders determine a FICO® Score for auto loans and credit card accounts respectively.

FICO^® Score 10

FICO® Score 10 is the newest version of the FICO® Score.  The FICO® Score 10 T version factors in trended credit bureau data for a more well-rounded assessment of an individual’s credit risk.   

What is a FICO^® Score used for?

FICO® Credit Scores are used by many lenders to evaluate whether to issue 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 estimate your credit risk—how likely you are to pay your credit obligations as agreed. They also help you obtain credit based on your actual borrowing and repayment history, without consideration of protected types of information such as race or religion.

While it is just one factor lenders may use in a lending decision, it may impact all of your credit, such as credit card interest rates, mortgages and car loans. Additionally, it’s important to note that each lender determines how they use the FICO^® Score in their credit evaluation criteria. 

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. Note, however, you don’t need a perfect score to access credit at the best terms and lowest interest rates.

What is a good FICO^® Score?

What’s considered a good FICO^® Score may vary from one lender to another, but checking our credit score chart will give you an idea of how good your FICO^® Score is. Generally, a score of 670 or more is considered good.

FICO^® Score vs. Credit Score

90 percent of lenders use FICO^® Credit Scores in their lending evaluation process, but there are other credit scores as well, often referred to as educational scores. These credit scores do not use the same calculations as the FICO^® Score, therefore the educational scores may vary greatly from FICO^® Scores.

It’s important to understand that a credit score represents the information found on the credit report at one bureau at a specific point in time, and that the information may not be the same at each. This is a key reason why people may see different FICO^® Scores when comparing their scores across TransUnion, Equifax, or Experian.

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