Understanding FICO® Scores

FICO® scores are the most well-known example of a credit score. The name FICO comes from the creators of the FICO score, Fair Isaac Corporation. They designed the FICO score as a way of calculating and predicting a person’s likelihood to borrow and repay debts responsibly.

What makes a FICO score?

Although the exact calculation of the FICO score is not available to the public, generally there are five main factors that may determine your score*:

• 35% of your FICO score is driven by your payment history – how timely is it?
• 30% of your FICO score is driven by how much debt you have - and too little can be as harmful as too much!
• 15% of your FICO score is driven by how long your credit history has been established.
• 10% of your FICO score is driven by the types of credit you use.
• 10% of your FICO score is driven by recent debt you’ve added.

FICO score ranges and what they mean

FICO scores range from 300 to 850, and the higher the score, the better. Here’s how the U.S. population rates by FICO score:*

• 13% have FICO scores of 800+
• 27% have FICO scores of 750-799
• 18% have FICO scores of 700-749
• 15% have FICO scores of 650-699
• 12% have FICO scores of 600-649
• 8% have FICO scores of 550-549
• 5% have FICO scores of 500-549
• 2% have FICO scores below 500

A FICO score by any other name…

There are other names for FICO scores, depending on the credit bureau reporting it. But the calculation is basically the same. The companies reporting FICO-like scores are:

1. Experian, under the name Experian/Fair Isaac Risk Model
2. Equifax, under the name BEACON®
3. TransUnion, under the name FICO Risk Score, Classic (formerly EMPIRICA®)

FICO scores vary based on the completeness and accuracy of your credit history as reported by that company. According to Fair Isaac*, a 100+ point difference in FICO score can produce even a full percentage point difference in interest rate on a 30-year, fixed rate mortgage.

* According to myfico.com, a division of Fair Isaac, as of August 2007. Fair Isaac and FICO are registered trademarks of Fair Isaac Corporation. Other names may be trademarks or registered trademarks of their respective owners.