FICO Score Explained: How the Most Common Credit Score Works

FICO Score: The Industry Standard

The FICO Score, developed by the Fair Isaac Corporation, is used in approximately 90% of lending decisions in the United States. Understanding how FICO scores work helps you make informed credit decisions.

FICO Score Versions

FICO has released multiple scoring model versions over the years. FICO Score 8 is most commonly used for credit card and personal loan decisions, while FICO Score 2, 4, and 5 are often used for mortgage lending.

Score Ranges

FICO Scores range from 300 to 850: - 800-850: Exceptional - 740-799: Very Good - 670-739: Good - 580-669: Fair - 300-579: Poor

Industry-Specific FICO Scores

FICO also produces industry-specific scores for auto lending (FICO Auto Score) and credit cards (FICO Bankcard Score) that may weigh factors differently.

How Lenders Use FICO Scores

Lenders use FICO Scores alongside other factors like income, employment history, and debt-to-income ratio to make lending decisions and determine interest rates.

Improving Your FICO Score

Focus on paying bills on time, keeping credit utilization low, maintaining a long credit history, and avoiding unnecessary new credit applications. Educational Disclaimer: This content is for educational purposes only.