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FICO Score Basics

by on August 12, 2008

The FICO score is the most commonly used score designed to rate your credit so that lenders can determine whether or not they should allow you to borrow money from them. Most borrowers have only a vague idea of what the FICO score is all about. Knowing the basics of how the FICO score is computed and what it means can greatly assist you in understanding the reasons that you want to keep your credit score high.

What Is a FICO Score?

The FICO score (an acronym for the Fair Isaac Corporation that does this rating) is a score that describes your credit. A high score means that you have good credit and a low score means that you have bad credit, relatively speaking. The FICO score is only one of many scores that are out there to rate credit however it is the one that is most likely to be reviewed by lenders and therefore is the one that you should be most concerned about understanding.

You can purchase your FICO score to see what your credit rating is; it is not free like your annual credit report is. The FICO score can be requested through credit reporting agencies or through FICO.

When you request your FICO score, you are going to get your consumer credit score from FICO. However, you should be aware of the fact that there are two other scores reported on by FICO – your automobile loan score and your home mortgage score. You may have a decent FICO score for consumer credit but not have a score good in either of these other areas depending on your credit history and outstanding credit information.

There are five different factors that are used when calculating the makeup of your FICO credit score. These are weighted as follows:

• 10% each to the type of credit that is involved (such as revolving credit) and to the number of recent credit searches that have been done.
• 15% to the amount of time that your credit history has been in development.
• 30% for your debt-to-credit ratio.
• 35% to your history of on-time payments.

As you can see, the most important things involved in calculating your FICO credit score will be your ability to make your payments on time and your ability to spend less on credit than the amount of credit available to you so that your debt-to-credit ratio stays low.

When you receive your FICO score, it is going to be given to you in the form of a number that is somewhere between 300 and 850. Six out of ten people will have a FICO score between 650 and 799. You want to have a credit score that is no lower than 650 in order to get good loans based on your FICO score. Be aware that other factors – such as a lack of employment – may impact your ability to get good loans even if you do currently have a high FICO score.

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{ 2 comments… read them below or add one }

Mrs. Not the Jet Set April 15, 2010 at 12:26 am

I think it’s time we challenge congress to help reform credit scores or at least pressure credit rating agencies to have better practices. Check out my post to see what you personally can do. Thanks!


bhazelton April 15, 2010 at 5:31 am

Great post by Mrs. NTJS on FICO score reform. FICO score and credit rating reform is an extremely important issue that has gotten lost in all of the economic turmoil we've experienced, but it's a very serious problem that is plaguing millions of Americans. We're being forced by these institutions to incur debt to our own detriment. I will be calling + emailing both my Senator + local Congressman as well as Senator Levin today about this issue.

Contact Senator Carl Levin today. Demand that our FICO and credit rating system be reformed:


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