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Understanding FICO Scores

Posted on September 18, 2015

A credit score is a number that summarizes your credit risk.

The score is based on a snapshot of your credit file(s) at one of the three major consumer reporting agencies (CRAs)—Equifax, Experian and TransUnion—at a particular point in time, and helps lenders evaluate your credit risk. Your credit score influences the credit that’s available to you and the terms, such as interest rate, that lenders offer you. The information in your credit files is supplied by lenders, collection agencies and court records.

Close-up on calculator screen showing the word Credit The credit scores most widely used in lending decisions are FICO® Scores, the credit scores created by Fair Isaac Corporation (FICO). Lenders can request FICO® Scores from all three major CRAs. Lenders use FICO® Scores to help them make billions of credit decisions every year. FICO develops FICO® Score based solely on information in consumer credit files maintained at the CRAs. Understanding your FICO® Scores can help you better understand your credit risk and allow you to more responsibly manage your financial health. A good FICO® Score means better financial options for you.

The classic FICO® Scores which are in use today fall within the 300-850 score range. This score range was introduced to establish an easy-to-understand, common frame of reference for lenders and consumers. Here’s a breakdown of how lenders view FICO® Scores:
  • Scores of 800 or higher are in the top 20 percent of U.S. consumers, and demonstrate to lenders that the consumer is an exceptional borrower.
  • Scores from 740 to 799 are in the top 40 percent of U.S. consumers, and demonstrate to lenders that the consumer is a very dependable borrower.
  • Scores from 670 to 739 are near the average for U.S. consumers, and are considered by most lenders to be good scores.
  • Scores from 580 to 669 are in the lowest 40 percent of U.S. consumers, though some lenders will approve credit applications within this score range.
  • Scores lower than 580 are in the lowest 20 percent of U.S. consumers, and demonstrate to lenders that the consumer is a very risky borrower.

Industry-specific FICO® Scores, such as those for auto lending or credit card lending, were developed to accommodate the unique characteristics of their respective industry and range from 250-900. Some lenders also use FICO® Scores NG, which range from 150-950.

It’s important to note that your FICO® Scores are calculated each time they’re requested; either by you or a lender. And each time a FICO® Score is calculated, it’s taking into consideration the information that is in your credit file at a particular consumer reporting agency at that time. So, as the information in your credit file changes, your FICO® Scores can also change.

© 2015 Fair Isaac Corporation. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

On Tap Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act.  On Tap Credit Union and Fair Isaac do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating.