FICO Score

How FICO is calculated

The FICO score combines five categories of credit data, weighted approximately as follows:

• Payment history (35%) — on-time vs. late payments. The single largest factor.
• Amounts owed (30%) — primarily credit utilization.
• Length of credit history (15%) — average account age, age of oldest account.
• Credit mix (10%) — variety of credit types (revolving, installment, mortgage).
• New credit (10%) — recent inquiries and new accounts opened.

The exact algorithm is proprietary, but the weights are widely documented and approximately accurate.

Score ranges

• 800-850 — Exceptional. Best rates on everything.
• 740-799 — Very Good. Most preferred-tier products available.
• 670-739 — Good. Average for US adults.
• 580-669 — Fair. Subprime credit terms.
• 300-579 — Poor. Very limited credit access.

The thresholds aren't continuous — going from 739 to 740 can unlock meaningfully better rates. Lender thresholds typically use the major round numbers.

FICO versions

There are actually several FICO scoring models:

• FICO 8 — most widely used in lending decisions. The version most consumers see in lender pulls.
• FICO 9 — newer; treats medical debt and authorized-user accounts more favorably.
• FICO 10 / 10T — newest; introduces "trended data" looking at how balances change over time. Adoption is gradual.
• Industry-specific FICO — auto lenders, mortgage lenders, and credit-card issuers often use industry-specific scoring variants.

This is why your FICO score in your credit-card app might differ from what a mortgage lender sees. They're using different scoring versions, sometimes with different scaling.

FICO vs. VantageScore

VantageScore is FICO's main competitor:

• Same 300-850 range.
• Different weighting and methodology.
• Most "free credit score" services (Credit Karma, Credit Sesame) display VantageScore.
• Most lenders use FICO for actual credit decisions.

The two scores often differ by 20-50 points for the same person. The VantageScore is a useful free check for trend; the FICO is what actually matters for credit decisions.

What hurts FICO most

Approximate severity:

• Bankruptcy — 100-200+ point drop. Recovers slowly over 7-10 years.
• Foreclosure — similar major hit.
• Account in collections — major drop; lasts 7 years.
• 30+ days late on a previously perfect account — 60-110 point drop.
• High credit utilization (>50%) — 30-100 point drop while elevated.
• Multiple new credit applications in short window — small per-inquiry drop, but meaningful in aggregate.

The damage diminishes over time. A perfect record going forward, combined with patience, recovers most of the impact within a few years.

How to improve FICO

The high-leverage actions:

1. Pay every account on time. Setting up autopay for at least minimum amounts eliminates late payments due to forgetfulness.
2. Lower credit utilization. Paying down revolving balances has direct effect; requesting credit limit increases helps similarly.
3. Don't close old accounts without reason. Closing reduces total available credit and can hurt utilization.
4. Avoid unnecessary applications. Each hard inquiry has small impact; a flurry of applications has cumulative effect.
5. Become an authorized user on a long-running, well-managed account.
6. Dispute errors on your credit report. Inaccurate negative items can be removed.

Score improvements typically come gradually. A focused effort can move scores 20-50 points within 6-12 months for most people; major improvements take years.

What FICO doesn't measure

A few things the FICO score doesn't directly capture:

• Income. A high earner with a thin credit file can have a lower score than someone with stable but smaller credit.
• Wealth or assets. Net worth isn't on the credit report.
• Total debt vs. ability to pay. FICO sees minimum payments and utilization, not whether you can actually afford the balances.
• Recent positive changes. Salary increases, new emergency funds, paid-off debts — until they show in account behavior, FICO doesn't see them.

This is why lenders look at credit scores as one input but verify income separately. Both factors matter for actual lending decisions.

FICO outside the US

FICO has international subsidiaries, but the dominant US scoring model isn't always available abroad. Different countries have different credit-scoring infrastructure:

• UK — Equifax, Experian, TransUnion all operate. Less standardized scoring than US.
• Canada — Equifax and TransUnion dominate; scoring is similar to US but with some variations.
• Most of EU — credit reporting varies by country; central bureaus often less consumer-facing than in US.
• Many Asian markets — credit history infrastructure is less developed.

Moving between countries often requires building credit history fresh; foreign credit history is rarely portable.

Why scores matter beyond credit

FICO and similar scores affect more than loan rates:

• Apartment rental applications
• Some employment background checks
• Auto and homeowner insurance pricing in many states
• Cellphone and utility-service deposits
• Some credit card and bank account approvals

The cumulative cost of poor credit across these channels can be substantial — often more than $100K over a working lifetime in higher rates and worse terms.

Free FICO access

Free ways to monitor your real FICO score:

• Most major credit-card issuers (Discover, Chase, Bank of America, Wells Fargo, Capital One, others) provide free FICO scores to cardholders.
• MyFICO.com offers paid services with full FICO access.
• Some banks provide free FICO scores to checking-account holders.

Beyond the score itself, the underlying credit report (free at AnnualCreditReport.com) is what actually drives the score. Reviewing reports for errors and unfamiliar accounts is worthwhile annually.