Fico Score

What is a FICO Score?

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When you need a loan or credit card, your creditor needs a way to determine how likely it is that you’ll repay them. The FICOⓇ credit score is used by many creditors to help them assess applicants. 

Not only does FICOⓇ scores help creditors decide whether to approve or deny an applicant, but it is also used to help determine the rate and terms. Let’s dive deeper and learn everything you need to know to understand FICOⓇ scores. 

What is a FICO Score?

Created by the Fair Issac Corporation (FICO), the FICO score is a credit score. When assessing the credit risk of a borrower and determining whether to extend credit to a borrower, lenders use the borrower’s FICO score and other details such as their credit reports. 

It is a three-digit number that ranges from 300 to 850. Some industry-specific scores will go up to 900. FICOⓇ credit scores are primarily based on the information that’s found on your credit report. The three consumer credit reporting bureaus (TransUnion, Experian, and Equifax) generate these credit reports that detail your credit activity and current credit situation. 

The FICO score takes this account data in five areas to calculate a score and determine creditworthiness: Payment history, current debt, types of credit accounts used, length of credit history, and new accounts. 

FICO scores are the most widely used credit scores in the industry. You may actually have several different FICO scores which are different by industry.

How is your FICO Score determined?

The information found on your consumer credit reports will largely determine what your FICOⓇ credit score is. Certain items can hurt or help your credit score. For example, if you carry a high balance to your credit limit, that could bring down your score. 

There are five categories that FICO breaks its scoring criteria into. Each category has a percentage value based on its importance. Here is the breakdown of the FICOⓇ Score 8 credit score below:

  • Payment history (35%) – The most important factor that goes into your score is your history of paying bills. On-time and late payments on credit accounts and public records as a result of non-payments (i.e. bankruptcy) are all part of your payment history.
  • Amounts owed (30%) – The amount that you on your installment loans, credit cards, and other credit accounts and your available credit that you’re using make up the next most important portion of your scores. This is also known as your credit utilization rate. 
  • Length of credit history (15%) – This is the age of your accounts. It factors in how long you’ve had your oldest and newest account. The average age of all your accounts and how long it’s been since you’ve used certain accounts are all factored in. 
  • Credit mix(10%) – The types of accounts that you have that make up your credit mix. This includes retail loans, mortgage loans, and credit card accounts. 
  • New credit(10%) – Recently opened accounts and new credit inquires are all taken into account in this factor. 

Different scoring models and your overall credit file may affect the actual percentage values, but this gives you a general understanding of what factors affect your credit score. Paying your bills on time and keeping your balances low weigh the heaviest on your score so you should be most focused on building these good credit habits. 

What is the FICO Score Range?

The FICOⓇ score range typically goes from 300 to 850, though in some industries it could be as go up to 900. The higher your score, the better. Here’s more on the FICOⓇ score range below:

FICO Score RangesRatingDetails
<580PoorA score in this range is well below the average score of a consumer. It demonstrates to lenders that you are a risky borrower.
580-669FairA score in this range is below the average score of consumers. 
670-739GoodA score in this range is at or a little bit above the average of a consumer. This scoring range is generally considered a good score by most lenders.
740-799Very GoodA score in this range is above the average of consumers. It demonstrates that you are a dependable borrower.
800+ExceptionalA range at or above 800 is well above the average score of consumers. It demonstrates to lenders that you are an exceptional borrower.

What is a good FICO Score?

According to FICO, a good FICOⓇ credit score would be between 670 and 739. A score above that could be considered “very good” or “exceptional”. Having at least a “good” FICOⓇ score should allow you to borrow money from most lenders.

 Having a good credit score is also important in many states because it is used as a factor to determine your car insurance rate. There are also some landlords that use it to screen tenants. Other credit rating companies such as VantageScore may have a different score range that’s considered “good”. 

What is the average FICO Score?

According to Experian data, the average FICOⓇ score in the U.S. in 2020 rose to 711. Over the past decade, credit scores have been slowly increasing. However last year was the biggest increase as it grew by 9 points since 2016 (it rose by 4 points from the prior year).

Average FICO Score by age

How old you are isn’t taken into consideration when calculating your credit score, although the age of your accounts does matter. Below is the average FICOⓇ score by age range so you can compare it to where you’re at (based on 2020 data):

  • 75+ years – 758
  • 56-74 years – 736
  • 40-55 years – 699
  • 24-39 years – 680
  • 18-23 years – 674

As you can see, older people have higher average scores than their younger counterparts. This is largely due to these individuals having longer credit histories. 

How can you increase your FICO score?

Having a good score gives you access to credit to big milestones like going to college and buying a house. It’s also helpful for non-credit-related activities. For example, it could affect whether or not your utility company requires a deposit. 

So if you wish to increase your FICOⓇ credit score here are some things that you could do it help:

  • Review and dispute errors on your credit reports – You get a free copy of your credit report from each of the credit bureaus at least once a year. Go to and request your copy. Make sure there are no errors that could be affecting your score and dispute them so they can be corrected.
  • Make on-time payments – Set up alerts to let you know when you have bills that are due or consider setting up automated payments so you never have to worry about missing a payment.
  • Keep your credit utilization below 30% – The best way to keep your utilization low is to pay off your balance in full each month. If that’s not possible, try to chip away at your outstanding balance to drop it to 30% or less as soon as possible. You may also ask your issuer for a credit limit increase to help lower your utilization. Just be sure not to add more debt with the higher limit. 

Why did my FICO Score drop?

The reason that your credit score dropped could be due to a variety of things. The most common are:

  • You have late or missed payments
  • You applied recently for a credit card, loan, or mortgage
  • Your credit utilization has increased
  • You closed a credit card
  • A credit limit on one of your credit cards decreased
  • There’s an error on your credit report
  • You’ve experienced a foreclosure, bankruptcy, or another major event

Practicing responsible spending habits and monitoring your credit regularly will help you improve your credit score. 

FICO Score vs Credit Score

A FICOⓇ credit score and a credit score are the same things in a sense. Your FICO score is just one type of credit score out of the many different ones out there. Even FICO has many different versions of its credit score, spending on the industry. Some common FICO Score versions  and their uses include:

  • FICO Score 8 – most widely used
  • FICO Bankcard Scores 2,4,5, and 8 and FICO Score 3 – used for credit card decisions
  • FICO Auto Scores 2,3,5, and 8 – used for auto lending
  • FICO Scores 2,4,and 5 – used for mortgage lending

VantageScoreⓇ, PLUS Score (by Experian), and Equifax Credit Score are other scoring models that are used.

Free FICO Score

You can get your FICOⓇ score for free in many ways. The most common is to get it through your credit card issuer. Other options are available online that provide free access, without having to be a cardholder including Experian Boost and Discover Credit Scorecard. 

Free Credit Score

Other resources to check your credit score for free are available through online resources such as Nerdwallet or CreditKarma. Be sure to review what credit scoring system they are offering and make note that your credit score may vary depending on the source. 

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