What is a FICO® score?

A FICO® score is a three-digit number that lenders use to measure your creditworthiness and decide what lending terms they may offer you.

You have many FICO® scores based on different versions and data from different credit bureaus. It’s one of the most common credit-scoring models used by lenders. 

VantageScore is another popular credit-scoring model. The scores you’ll see on Credit Karma are VantageScore 3.0 credit scores from TransUnion and Equifax, two of the three main credit bureaus.

We’ll review how your FICO® scores are calculated, as well as FICO score ranges and why you have different FICO scores.

• Why are your FICO scores important?
• How is a FICO score calculated?
• Why are there different FICO scores?
• What is your FICO credit score used for?
• What are the FICO score ranges?
• Next steps: Monitoring your credit
• FAQs about FICO® scores?

Why are your FICO® scores important?

FICO® scores are widely used by many types of creditors, including lenders, credit card issuers and insurance providers, to gauge how likely you are to repay the money loaned to you.

The higher your credit scores, the more likely you’ll end up with better rates and terms on your loan. If you’re approved but have lower scores, you may be offered a higher interest rate or worse terms than if you had higher scores. In the case of insurance companies, lower scores may sometimes lead to higher premiums.

Knowing your scores can help you determine the likelihood of your application getting approved and whether the creditor is likely to offer you favorable terms. In some cases, a lender may even have a threshold that your scores must meet or pass to get approved.

You can try to check the lender’s website or ask a representative to find out whether there is a threshold to be approved and which scoring models the company uses. But some companies may not share this information.

What’s a good credit score?

On a 300 to 850 scale, scores in the high 600s up to the mid-700s  and above are often considered good. FICO usually considers a credit score between 670 and 739 as “good.” 

However, what’s considered a good credit score is ultimately up to the lender reviewing your score and the criteria they have. Some companies use their own proprietary models to evaluate your credit and may consider other factors such as your income, debt-to-income ratio and employment history.

How is a FICO score calculated?

Your FICO® scores depend on the information in your credit reports. Positive habits like on-time payments can raise your score, while negative marks like high debt ratios or accounts in collections can lower it.

FICO typically breaks down its scoring criteria into these five weighted categories:

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• Payment history (35%): Your history of paying bills is generally the most important factor in determining your FICO® scores. This category looks at whether you’ve made your past credit payments on time. It analyzes the severity of any late payments, how recently they occurred and how frequently they happened. 
• Amounts owed (30%): This factor analyzes how much debt you carry by looking at your credit utilization rate — or how much debt you have compared to your credit limit. Lenders look at both your credit utilization per account and your credit utilization in total across all accounts. Using a high percentage of your available credit can indicate to lenders that you may represent a higher risk. 
• Length of credit history (15%): This category considers the age of your oldest account, the age of your newest account and the average age of all your accounts. Generally, a longer credit history is seen as positive because it provides more data on your repayment habits. This factor also looks at how long it’s been since you used certain accounts.
• New credit (10%): This factor looks at the number of new accounts you have opened and recent hard inquiries, which typically happen when you apply for new credit like credit cards. Opening several accounts in a short period of time can signal greater risk to lenders. 
• Credit mix (10%): You don’t necessarily need one of each, but demonstrating you can handle different types of credit can be beneficial to your scores. Types of credit included in your credit mix can include credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.

Why are there different FICO scores?

Fair Isaac Corporation, or FICO, introduced the first standard credit score in 1989.  Since then, FICO has created dozens of different versions of the original score, most recently launching FICO® Score 10, FICO® Score 10T, FICO® Auto Score 10 and FICO® Bankcard Score 10.

Each version uses a different model to calculate its scores. FICO periodically updates these scoring models for a variety of reasons, including:

• To adapt to consumer behavior: Newer versions might treat certain data points, such as medical debt, differently than older versions to reflect a more accurate picture of credit risk. For instance, newer models may penalize unpaid medical collections less severely than other types of debt.
• To meet lender needs: Lenders can choose which version they want to use. Some lenders may stick with older versions because those versions are integrated into their existing underwriting systems or because they prefer the risk assessment logic of that version, while other lenders may prefer the latest versions.
• To adjust how they calculate data from the different bureaus: FICO calculates scores based on data from Equifax, Experian and TransUnion. Because not all lenders report to all bureaus, these credit bureaus may not have identical information about your credit history. Your FICO score can vary depending on which bureau’s data is being used to calculate it. It can also vary based on the date the information is reported to the bureaus.

What is your FICO credit score used for?

Because your FICO® scores provide a snapshot of your credit risk, they are used by a variety of industries to make financial decisions. Those decisions can include:

• Loan and credit card approvals: Lenders can check your FICO® scores to decide whether to approve your application for credit cards, personal loans, and lines of credit. A higher score usually signals to the lender that you are a lower-risk borrower.
• Interest rates and credit limits: Your scores don’t just help determine approval. They also influence the terms of your offer. Higher scores often qualify for lower interest rates and higher credit limits, potentially saving you significant money over the life of a loan. On the other hand, a lower score might result in a higher annual percentage rate (APR) or a required security deposit.
• Mortgage lending: Mortgage lenders check credit scores to assess risk for home loans. While Fannie Mae and Freddie Mac used to require lenders use FICO scores to guarantee conventional loans, they now accept VantageScore 4.0 as well.
• Industry-specific decisions: FICO auto scores are specifically tailored for auto loans, and bankcard scores are tailored for credit card issuers. These scores refine the base score calculation to better predict risk for these specific types of debt. For example, an auto score might weigh past auto loan repayment history more heavily than a general score would.

What are the FICO® score ranges?

FICO® scores generally fall on a scale of 300 to 850. Knowing where you stand within the good FICO score range can help you understand your approval odds before you apply.

Base FICO® Score Ranges (FICO® Score 8)

While these are the standard ranges, keep in mind that industry-specific scores (like those used for auto loans) can range from 250 to 900.

Next steps: Monitor your credit

Knowing where your scores stand can help you take control of your financial health.

Credit Karma offers free credit scores and reports from TransUnion and Equifax that you can check daily using the VantageScore 3.0 model. Checking your reports regularly can help you spot errors and track your progress.

As you monitor your credit scores, be sure to focus on foundational behaviors — like making on-time payments and keeping your amounts owed low — to help you improve your standing across all scoring models, whether it’s FICO or VantageScore.

FAQs about FICO® scores?