What is FICO?

You might have asked yourself this question multiple times without finding an answer, especially if you are not among those inclined to type the slightest conundrum in Google. Well figuring out what your FICO® score represents isn’t rocket science, and the story goes thus. FICO® Score was developed by the Fair Isaac Corporation to help lending institutions measure the creditworthiness of borrowers. The Fair Isaac Corporation is a US-based B2B software solutions provider that changed its name to FICO® in 2009.

FICO score is based on five factors that lending institutions evaluate along with a borrower’s credit report to determine whether credit can be safely issued to the borrower. The payment history which is based on timely payment of credit is the first and most important factor in FICO® calculations. Payment history alone accounts for 35% of any individual FICO® score. The available balance or amount of debt relative to credit limit comes next to your payment history in terms of importance and accounts for 30% of your FICO® score. Experts recommend that your available credit balance be kept below 30% of your available credit. What that implies is that you should do your best possible to stay below the $2,400 mark for an $8,000 credit value. Next comes your account history, which shows how long you have had credit. The exact figure of this factor which contributes 15% to the overall FICO score is computed from the average length of the oldest and newest account. Credit mix which measures how diverse your credit portfolio is and recent credit applications contribute 20% to your FICO® score.

FICO® score ranks credit consumers based on how likely they are to keep their credit obligations. It helps lenders to make the best decisions and carefully assess an applicant’s credit risk. You will find a detailed explanation of the credit score in our article credit score explained.

The Range

FICO® ranks individuals from 300 at the bottom of the scale, way up to 850. For most financial and lending institutions, a score of above 650 is good and can be considered creditworthy. FICO® scores below 620 are considered subprime, and consumers with such ratings will hardly be considered for new credit. More simply, the higher you go on the scale, the better your chances of being considered for credit. A consumer with a FICO® score of 700, for example, will likely be considered for credit quicker than another consumer with a score below 620 FICO® points. Again, since lenders feel that borrowers with lower FICO® score exposes them to more risk and could turn out to be delinquents. The level this up with higher APR or interest rate on low-rank borrowers. For lower-risk borrowers with FICO® scores above 650, the interest charged is lower. Generally speaking, a FICO® score below 580 is poor, a score between 580-669 is fair, a score of 670-739 is good, 740-799 very good, and any score of 800 and above is exceptional.

FICO® Score Releases and Adoption

Fair Isaac Corporation released the base version of the FICO® score in 1989. From that time, they have released several updates, with each new update provided openly in the market for lenders. However, lenders have not adopted all new versions of FICO®. Although the FICO® score is still the most widely used with over 80% of lenders in the United States preferring it over its close counterpart, lenders decide whether or not they wish to adopt new FICO® updates.

At the moment, FICO® 8 is the most widely adopted version. FICO® 8 is a more predictive score that captures the fundamental aspects of a borrower’s interaction with debt. Users have also described the FICO® 8 scores as more solicitous for borrowers, and statistically better than previous versions. FICO® corporation released the FICO® 9 with modifications to the medical collections account in 2016. It hasn’t been largely adopted, but the corporation has announced two new versions of the FICO® score—the FICO® 10, and FICO® 10T in January 2020.

FICO® Score Versus the VantageScore

Experian notes that VantageScore® is gaining traction in the industry. Since it was created by the three major credit bureaus—TransUnion, Experian, and Equifax in 2006, VantageScore® has been steadily adopted by lenders across the United States. It is difficult to draw the line between the two because they both measure of the possibility that a borrower will pay a bill later than 90 days in a space of 24 months.

Some obvious differences between the FICO® and VantageScore® are the tri-bureau nature of the VantageScore® which uses the same calculation for all three bureaus to compute a one-time credit rating. As for the FICO® score, the report for each bureau is comparable but different in some sense. FICO® score also requires 6 months of activity and different accounts for a credit report to be rated, while the VantageScore® can be computed even with one account and less than 6-month activity. Although the FICO® score ranges from 300 to 850, industry-specific score ranges from 250 to 900. Earlier releases of the VantageScore® ranged from 501 to 990, but with the new vintage 3.0 and 4.0 release, a similar 300 to 850 points range has been adopted.

How can you Get Your FICO® Scores?

Many credit providers offer free credit scores to their customers. In most cases, however, you will have to contact FICO® via their website to pay for a more reliable credit FICO® score. It may be necessary to pay this sum when you want to correct an error in your credit report. Sources put the cost for a paid report is around $20, not quite expensive if you look at how much you will save in the long run. The Fair Credit Reporting Act allows companies like VintageScore® and FICO® to charge a fee to allow you to see your credit score.


Some lenders compare FICO® and VintageScore® before choosing whichever works best. Both scores serve the same purpose at any given time. The point is FICO® is the most popular among lenders and many credit providers will choose it by default. Newer updates to the FICO® 8 score like the FICO® 9, 10, and 10T are not popular in the credit industry, with a few cases of adoption underway. If you have FICO® credit problems and you need help resolving it, you can send us a message and one of our expert professionals will hook up with you.

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