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Background
FICO Credit scores are based on the information in your credit bureau reports. The majority of credit scores are between 300 and 850. Higher scores are better because they increase your chances of getting the loans you want. Keep in mind that when lenders evaluate a credit application credit scores are not the only factor they use in making their decision. They usually ask for additional information (such as income and monthly payments) to determine your ability to repay the loan.
What goes into a score?
The basic credit scoring formula takes into account several factors from your credit report. The impact of each element fluctuates based on your own credit profile:
- Payment history — A good record of on-time payments will help boost your credit score.
- Outstanding debt — Balances above 50 percent of your credit limits will harm your credit. Aim for balances under 30 percent.
- Credit account history — An established credit history makes you a less risky borrower. Think twice about closing old accounts before applying for a loan.
- Recent inquiries — When a lender or business checks your credit, it causes a hard inquiry and a slight ding to your credit score. Apply for new credit in moderation. "Soft" inquiries such as pre-approved offers or checking your own credit score will not impact your score.
- Types of credit — A healthy credit profile has a balanced mix of credit accounts and loans.
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FICO Score Simulator
See how simple changes to the way you manage credit can affect FICO scores. Learn more |
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Contacting Bureaus
For copies of your credit reports, you can contact the three credit bureaus directly. Learn more
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Frequently asked questions about credit scores
1. What is a FICO score?
2. Why does my FICO score change from time to time?
3. What is a credit score?
4. What factors influence my credit score?
5. How does my credit score affect me?
6. What is a "good" credit score?
7. What is credit scoring?
8. How is a credit-scoring model developed?
1. What is a FICO score?
A FICO® score (which can range between 300 and 850) is a measure of your creditworthiness. The higher the score, the lower the risk. Specifically, borrowers with high FICO scores generally show less serious payment delinquency than borrowers with low scores.
Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the U.S. are produced by Fair Isaac and Company, or FICO. FICO scores are provided to lenders by the three major credit reporting agencies: Equifax, Experian, and TransUnion.
It is important to note that your score may be different at each of the three main credit reporting agencies. The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the three credit reporting agencies are different, it's probably because the information those agencies have on you differs.
2. Why does my FICO score change from time to time?
The credit bureaus calculate your FICO score based on the information contained in your credit file. As your credit history changes, your FICO score will also change. In addition, we sometimes obtain information from different credit bureaus at different times (for example, we may obtain your score from one bureau when your account is opened and from a different bureau to review your account later on). The information in your files at the various credit bureaus may vary because some creditors report information only to certain credit bureaus and not to others.
3. What is a credit score?
A credit score is a figure used by lenders as an indicator of how likely you are to repay your loans. Your credit score is generated by a mathematical formula utilizing the data from your credit report. Lenders have been using credit scores as part of the lending decision for over 20 years.
4. What factors influence my credit score?
Various factors determine your credit score, including the following:
- Payment history
- Outstanding debt
- Length of credit history
- Severity and frequency of derogatory credit information such as bankruptcies, charge-offs, and collections
- The amount of credit used compared to the credit available
5. How does my credit score affect me?
Your credit score is an important indicator of your financial health. Lenders use your credit score to determine:
- Whether or not you are a good candidate for a loan
- What type of interest rate you will pay
6. What is a "good" credit score?
Typically, the higher the score, the better. Each lender decides what credit score range it considers to be a good credit risk or a poor credit risk. For this reason, the lender is the best source to explain what your credit score means in relation to the final credit decision. After all, they determine the criteria used to extend credit. The credit score is only one component of information evaluated by lenders.
7. What is credit scoring?
Credit scoring is a method used by lenders to help decide whether or not you are a good candidate for a loan. The scoring system:
- Compares information in your credit report to the performance of consumers who have similar credit characteristics
- Examines many credit characteristics, including your payment history, the number and kind of accounts you have, the number and frequency of late payments, and any collections or bankruptcies
Generally speaking, positive credit characteristics make your score higher and help you to qualify for better loans. Negative characteristics make your score lower and may interfere with your ability to qualify for the best loan terms.
8. How is a credit-scoring model developed?
A credit-scoring model is developed by using several criteria, including:
- Selecting a large sampling of customers
- Analyzing the data in their credit reports to determine which factors relate to creditworthiness
- Assigning a degree of importance to each of the factors, based on how accurate a predictor it is in determining who will repay their loan on time
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