FICO® Credit Score

What is a FICO Credit Score and How to Raise Your Credit Score

The FICO score is the dominant credit score lenders use to assess how deserving you are of their credit. Whether you're looking to get a mortgage, car loan or home-equity loan, you're going to get scored.

Named after Fair, Isaac & Co., the firm that developed the scoring model used by the three major credit bureaus, your FICO score is calculated using a computer model that compares the information in your credit report to what's on the credit reports of thousands of other customers.

The scoring system awards points for each factor that can help predict the likelihood of a person repaying debts on time. The total number of points -- the credit score -- predicts how creditworthy a person is. The FICO score, a three-digit number between 300 and 850, is a snapshot of a person's financial standing at a particular point in time. The higher a credit score, the more likely a person is to be approved for loans and receive favorable interest rates.

How does your credit score stack up?

The scale runs from 300 to 850. The vast majority of people will have scores between 600 and 800. Generally, a score of 720 or higher will get you the most favorable interest rates on a mortgage.

Fair Isaac reports that the American public's credit scores break out along these lines:

Fico score distribution

National Distribution of FICO Scores

Source: Fair Isaac Corp.

In general, you are likely to be considered a better credit risk if your FICO score is high. Under mortgage lending guidelines, for example, a score of 720 or above indicates a very good credit history. People with these scores will usually find obtaining credit quick and easy, and will have a good chance to get it on favorable terms.

Scores between 650 and 680 (average FICO scores fall into this range) indicate basically good credit, but also suggest to lenders that they should look at the potential borrower to assess any particular credit risks before extending a large loan or high credit limit. People with scores in this range have a good chance at obtaining credit at a good rate, but may have to provide additional documentation and explanations to the lender before a large loan is approved. This means that their loan closing may take longer, making their experience more like that of borrowers in the days before credit scoring, when every individual was researched.

A score below 650 may prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk-but it does not mean that they can't get credit. The process will probably be lengthier and, as noted, the terms may be less appealing, but often credit can still be obtained.

How you FICO credit score is calculated

A FICO score is based on the information in your credit report located at that particular credit bureau. The actual scoring process is proprietary, and the algorithms are copyrighted. A score is determined by summarizing a number of factors in your credit report.

FICO scores are calculated from a lot of different credit data in your credit report. The percentages in the chart reflect how important each of the categories is in determining your score. These percentages are based on the importance of the five categories for the general population.

The Fair, Isaac model takes into account five factors when evaluating your credit worthiness:

FICO score

1. Past payment history

About 35 percent of your FICO score is based on this, which includes late payments, delinquencies and bankruptcies. The fewer the late payments, the better your score -- though a recent late payment hurts your score more than one from five years ago.

2. Outstanding debt

About 30 percent of your FICO score, this includes what you owe on your credit cards and how much you owe on installment loans, compared with the original amounts of the loans. Someone who uses a high amount of available credit (say 75 percent) is a greater risk than someone who uses only 25 percent according to Fair, Isaac.

3. How long you've had credit

How long you've had accounts and how often you use them, this accounts for about 15 percent of your FICO score.

4. New applications for credit

According to Fair, Isaac, "research shows that opening several credit accounts in a short period does represent greater risk, especially for people who do not have long-established credit history." This makes up about 10 percent of your FICO score.

5. Types of credit

Making up about another 10 percent of your FICO score, this includes credit cards and loans, including installment and mortgage loans.

How to Raise Your Credit Score

To raise your FICO credit score you need to be vigilant on your credit report and score by keeping updated and removing any errors. In addition, try to add positive information and not to add any negative information. If there's negative information such as late payments, try add explanation on your credit report.

Review your credit report and score
Improve factors noted as reason codes on your credit score analysis report .
Correct errors on your credit report.
Add information showing stability.
Avoid unnecessary inquiries.
Build an excellent payment history
Monitor your credit report

For more information, see How to Improve Credit Score page.

How To Check Your FICO Score

You can purchase your FICO credit score at or credit bureaus. Order your FICO Score by clicking HERE.

Related article: What is a good credit score?