What Kind of Score Is FICO?

Your FICO score is a widely used indicator of your credit-worthiness. Lenders, landlords and other businesses consider individuals with a high FICO score to be good credit risks, that is, very likely to pay back any debts owed. Conversely, the same banks and businesses consider a client with a low FICO score to be a substantial credit risk. Customers with high FICO scores are generally given better interest rates and credit terms than those with lower scores.

Fair Isaac Corporation

The Fair Isaac Corporation, found in the 1950's by Bill Fair and Earl Isaac, developed the FICO scoring system. FICO is a mathematical score assigned to individual based on a variety of factors such as timely payment of credit cards and mortgage payments. FICO is very widely used in the financial and real estate industries as a key determinant of a person's credit-worthiness.

FICO Scores

FICO scores are assigned in the range 300-850, with 850 representing excellent credit. In general, scores above 800 are treated as excellent credit, while scores below 600 are treated as a high risk to lenders. FICO scores in between 600 and 800 are considered good to very good credit.

Components of a FICO Score

Although the exact manner in which FICO scores are calculated is an industry secret, the general factors that make up the score are well-known. Your payment history is the most important component; paying accounts on time is treated favorably, while late payments or bankruptcies lower your FICO score. The length of your credit history is also a factor, with a lengthy history of good credit raising your score more than a recent history. Other components of FICO include the amount you owe, your pattern of recent credit applications, and the mix of credit cards held.

Prohibited Factors

Federal law prohibits FICO and other credit scoring systems from taking into account discriminatory information, such as race, religion, gender or marital status in assigning credit scores.

Finding Out Your FICO Score

You can purchase your FICO score and a credit report directly from Fair Isaac. You can also obtain your credit report for free, but it generally will not include your numerical FICO score.