What is a FICO Score?

Your FICO Score.

Your FICO score is one of the most important numbers of your life. It is a key factor in determining the interest rate on your next mortgage, auto loan or credit card. It may even determine whether or not you get an apartment or a job. For these reasons, it’s important to monitor your credit score, and understand how it works. This quick Q&A will walk you through some FICO score basics.

Is there a difference between a FICO score and a credit score?
No, they are the same. The Fair Isaac Corporation (FICO) issues credit scores based on a predetermined range. You will be assigned a number between 300 (worst) and 850 (best).

How is my FICO score calculated?
Fair Isaac takes a number of factors into consideration to calculate your credit score. These include your payment history, how long you have had lines of credit open, and your payment timeliness.

Here is a quick breakdown of what is factored in, by percentage:
•35%: Your payment history: all timely, tardy and missed payments. Recent history has the greatest impact.
•30%: How much you owe versus your overall credit limit (often called the debt utilization ratio). Debt hurts your score, but installment loans that create a regular (and timely) payment record can help your score.
•15%: The age of your accounts. Old accounts are trustworthy. New accounts are met with some suspicion.
•10%: New credit: inquiries into your account, new accounts, any effort put into turning around bad credit around. Too many new inquiries look bad.
•10%: Types of credit: credit card debt, student loan debt, etc. The best way to raise this part of the score is to diversify your credit sources.

How can I find out my credit score?
You are entitled to one free credit report each year from any (or all) of the three major credit bureaus: Equifax, Experian and TransUnion. You are entitled to another one if you are denied credit. is the only government-endorsed website for obtaining your credit report. Getting your actual credit score may cost a bit of money. Check out the Consumer Financial Protection Bureau’s article here for more details.

What do the score ranges mean?
Here’s a quick breakdown of each score range and its significance.
Bad Credit: 300-579
Poor Credit: 580-629
If you have bad credit or poor credit, you will probably know it. You will have missed a lot of payments, declared bankruptcy, or perhaps you’re just new to the world of credit. You may have a hard time getting a card, or you’ll have to pay the highest interest fees if you do. If this is you, it is time to rebuild your credit by getting a secured card, or taking out a small loan, and establishing some sort of solid payment history.

Fair Credit: 630-689
If this is you, you will qualify for a number of cards, but you may not get the lowest interest rate or the best rewards. To keep raising your score, keep your debt utilization low. Borrow conservatively and make regular payments. Don’t close old accounts unless you are paying too many fees. Older accounts count more toward your score than younger ones.

Good Credit: 690-749
Excellent Credit: 750-850
With a good credit score, you will qualify for most credit cards. With excellent credit, you will get the lowest interest rates, the highest credit limits and the best rewards. Take full advantage of your benefits and keep making your payments on time to stay on top.

Above all else, be smart! Make your payments on time, and stay under your limit. It’s also good to avoid financial products with crazy-high interest rates, like cash advances. If you have bad credit and need to start from scratch, get a secured credit card and use it responsibly.

Courtesy of, an unbiased personal finance website dedicated to promoting financial literacy.