![]() Typically if you want to get approved for the best offers, you may need a very good or exceptional credit score. Lenders will consider many factors when evaluating your credit applications, and there may be a minimum credit score requirement. However, FICO shares some general ranges for what lenders might use: Lenders can set their own definitions for what they consider to be a bad or good FICO Score. As a result, creditors may be more likely to approve your application or offer you favorable terms if you have a higher FICO Score. With both the base FICO Score and the industry specific scores, a higher FICO Score is better because it indicates someone is less likely to fall 90 days behind on a bill. Additionally, FICO has industry specific credit scores for auto lenders and card issuers that range from 250 to 900. There are base models, such as FICO Score 8, 9 and 10, which range from 300 to 850. What are the FICO Score ranges?įICO creates different types of FICO scores, and it periodically releases new versions of its scores. Why do you have a different credit score number between different companies? Here’s the difference between a FICO Score and a VantageScore. A custom score might be better because it’s tailored to the company’s products and target customers, but it can also be expensive to develop and maintain. And FICO works with companies to help them create these scores. And in 2006, the bureaus formed VantageScore, the company that creates VantageScore credit scores - many personal finance websites offer users a free VantageScore credit score.Ĭreditors can also create their own custom credit scoring models rather than buying and using one of the “generic” models from FICO, VantageScore or the bureaus. However, the big three consumer credit bureaus, Equifax, Experian and TransUnion, also develop credit scores based on their credit reports. It’s also one of the most popular credit scores, and 90% of top lenders use FICO scores. You might consider it a well-known brand of credit score - the Kleenex to your facial tissue. credit score - what’s the difference?Īlthough FICO was one of the first companies to create risk scores based on credit reports, what we generally call credit scores, it’s not the only company that builds credit scores today. Lenders can use FICO scores to quickly assess risk and decide whether to approve a credit application and the rates and terms to offer. However, there’s a lot of information to weed through.įICO was one of the first companies to develop credit risk scoring models - an algorithm that can analyze a credit report and give lenders an easy-to-read number. The information in the credit report can help the company understand the risk associated with lending you money. There are a variety of non-FICO Scores available as well that some lenders and insurers (don’t forget that many insurance companies will check your credit as well and your premium may be affected by a low credit score) use to make decisions.When a company reviews your application for a new loan, credit card or line of credit, it will often request a copy of one of your credit reports. For example, if your three FICO scores are 680, 530, and 630 your middle score is 620. Since the three scores can vary, some lenders will use the middle score (sometimes called the “representative” credit score). All of the scores, however, are developed using the same methods by Fair Isaac and have been rigorously tested to ensure they provide the most accurate picture of credit risk. The calculation is based on five categories: 1) payment history 2) amounts owed 3) length of credit history 4) new credit and 5) types of credit used.Įach credit reporting agency (TransUnion, Equifax, Experian) has a different FICO Score calculation that is determined by the information in that agency’s credit report for a specific person. ![]() This score is based solely on information found in your credit report and ranges from 300 – 850. The FICO Score was created by the Fair Isaac Corporation and is the most widely used (90% of lenders rely on the FICO Score). When you apply for credit from a lender, chances are they will pull your FICO® Score. A low credit score could indicate a higher risk to the lender. A high credit score indicates you are a low-risk borrower (have a history of on-time payments, do not over-extend credit, and don’t have too many credit accounts). Lenders use the credit score to determine whether or not to lend to you, what the interest rate will be on the loan, and other terms that impact the cost of credit for the consumer. ![]() ![]() A credit score is an assessment of your creditworthiness. ![]()
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