What is FICO Score?

A FICO Score is a 3 digit credit rating created by the Fair-Isaac Corporation (FICO) which ranges from 350 to 850. The higher the number; the better the score.

FICO is essentially a software system, and the name of a company, which uses the contents of a credit report to determine a potential borrower’s credit worthiness to a lender. There are a number of credit scores, all ranging from 350 to 850. The most widely used credit score by lenders is the FICO score for its versatility and reputation.

How does it work?

How exactly the FICO algorithm determines a credit score is proprietary, but we still have a good idea of how scoring works thanks to FICO. FICO offers a variety of scoring models to each member of their customer base, which is made up of lenders, bankers, etc. Scoring models vary depending on the primary purpose of the loan. For a potential borrower seeking a loan to purchase a car, the FICO score their potential lender seeks may be weighted for an auto loan purpose. For mortgage loans, lenders look for a FICO score geared toward long-term payments and histories.

What is included in your score?

Note that a FICO score will take into consideration all of the information contained within a credit report as provided by either Equifax, TransUnion, or Experian. Different bits of information contained in a credit report will have varying effects on raising or lowering a FICO score.

A FICO credit score of:
  • 300 to 579 is considered Very Poor.
  • 580 to 669 is considered Fair.
  • 670 to 739 is considered Good.
  • 740 to 799 is considered Very Good.
  • 800 to 850 is considered Exceptional.

These figures aren’t exact. They’re averaged, and based on the public information we have regarding FICO’s scoring model and past scores. While these percentages aren’t exact, they’re close enough to give you an idea of what carries the most importance in your credit history. It will also let you know the areas you may be able to address on your credit report.

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