What is a FICO Score?

What is Fico Score Article

A FICO score is a three-digit number that summarizes a consumer’s credit report. The score helps lenders determine the likelihood of a borrower repaying a loan and is used to determine the credit risk of offering additional credit. Different lenders will have varying FICO score requirements.

The following ranges are a score and ranking breakdown provided by FICO:

  • Less than or equal to 580 = Poor
  • 580 – 669 = Fair
  • 670 – 739 = Good
  • 740 – 799 = Very good
  • 800+ = Exceptional

FICO scores consist of five components: payment history, current debts, type of credit, credit history, and new credit.

  • Payment history accounts for 35% of the score and considers the on-time payments of debts.
  • Current debts make up 30% of the score, having too many debts may lead to a lower score.
  • Types of credit account for 10% of the score. A mix of credit is evaluated for this component, including housing loans, car loans, credit card debt, etc
  • The length of credit history comes in at 15%. Having a longer credit length supports a higher score. The more time you have recorded indicating responsible use of credit, the more potential you have to secure a high credit score.
  • New credits are evaluated for 10% of the score. This evaluates and considers any recently opened lines of credit.

Your FICO score is one of many important requirements lenders consult when offering a new line of credit.

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