You could have a high-income executive who owns a $2 million dollar home with just a $500,000 mortgage on it, has $1 million in savings and investments, but could still have a lousy credit score if he/she has negative items in their credit file. Here are the 5 main components (ingredients) FICO uses to create your credit score.Īs you can see, your FICO score is limited in the picture it paints about your creditworthiness. So every day, thousands of lenders use FICO to more accurately determine your credit risk. With 27 million FICO Scores purchased every day, you could say lenders “eat them up.”Ī lender could order your credit reports from the bureaus and search the results with a fine-toothed comb, but a simple, 3-digit score is a quick way for them to classify your risk category with little work. Simply put, FICO’s job is to take your credit ingredients (your mix of credit, payment history, age of credit accounts, etc) and serve the results to lenders in an easy-to-digest, 3-digit credit score.
Without FICO, lenders could still get your credit reports, scour through them, and determine if you’re a good risk, but it’s a lot easier if someone else (the chef/FICO) does it! You expect the chef to prepare the ingredients so you can easily consume them. Now, when you go into a restaurant and order an omelet, you don’t expect the server to come back and drop 3 raw eggs, a bowl, and some cheese in your lap. The info they have is like the ingredients. Their job is to collect information about your credit history. You’ve probably heard of the big three credit bureaus (Experian, TransUnion, and Equifax). The most commonly used models have a range of 300 to 850. FICO offers many score types (called models). Lenders buy these scores from FICO to help them make decisions about whether or not to approve you for credit, among other purposes. Your FICO Score is a 3-digit number that estimates your risk as a borrower based on factors like your payment history, age of credit accounts, and mix of credit. A good FICO credit score typically ranges between 670 to 739, but again, your score will vary by the FICO model.īut first, let me explain what FICO does so even your 6-year-old baby brother or nephew could understand. In this section, we’ll help you determine which FICO score to check and where you can get it.
Please note: Many people have three separate scores for FICO 8, 9, 10, 10 T, along with FICO Bankcard Score 8 and FICO Auto Score 8. Scores with a 4 are exclusively from Transunion.
Scores with a 2 are exclusively from Experian. Key: All scores above that contain a 5 are exclusive to Equifax.
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More Info: How to check your FICO 9 Score? | What is Ultra FICO? | FICO 8 vs FICO 9 | What new changes are in FICO 10? More Info: How to check your Bankcard scores? | What is a good FICO Bankcard 8 score? 💳 Used in Credit Card Decisions: FICO Bankcard Score 2, 3, 4, 5, 8 More Info: How to check your Auto scores? | What is a good FICO Auto score? | Minimum FICO Score for an auto loan 🚗 Used in Auto Lending: FICO Auto Score 2, 4, 5, 8 More Info: How to check your Mortgage scores? | Why are my scores different? | FICO 2 vs 8 | FICO 4 vs 8 | FICO 5 vs 8 🏠 Used in Mortgage Lending: Beacon 5.0 from Equifax, FICO-II from Experian, and FICO Classic 04 from TransUnion More Info: How to check your FICO 8 score? | What is a good FICO 8 score? | FICO 8 vs FICO 9 | FICO 8 vs VantageScore® To learn more, click the “more info” options below each score FICO ® Score Types: FICO Is the Score Used by 90% of Lenders
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