FICO stands for Fair Isaac Corporation, which came up with one of several formulas used to calculate a credit score. The FICO score is the most popular and well-know credit score. The term is often used to refer to credit scores in general.
History
The Fair Isaac Corporation introduced the formula for the FICO score in 1970. It took almost 12 years for the founders of the company, mathematician Earl Isaac and engineer Bill Fair, to write the formula.
Features
The actual FICO formula is a closely guarded secret. It includes the individual's borrowing history, punctuality of payment, length of credit history and types of credit used.
Significance
The FICO formula revolutionized the lending industry. The FICO score is a simple three-digit number that elegantly summarizes pages of complex credit history. The numbers tells lenders about the creditworthiness of potential borrowers.
Size
The FICO score ranges from 350 to 850. The higher the score, the more creditworthy the individual. A score of 720 or higher is considered to be good.
Fun Fact
In 2009, Fair Isaac officially changed the company name to FICO (Fair Isaac Corporation).
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