You probably know what a FICO score is. But how is a credit score different from a FICO score? Are they different at all? Read to know more about FICO vs. credit score.
What is a credit score?
By “credit score,” most people mean a three-digit number that shows a borrower’s track record of paying back loans and lines of credit. A higher credit score is indicative of your responsible use of credit and timely repayment of debts. On the other hand, if your credit score is low, it could mean that you have trouble keeping up with your bills.
Applying an algorithm developed by a credit ratings organization, such as VantageScore or FICO, to a borrower’s credit record yields the credit score. A credit report contains details about your financial history, such as:
- Personal information (such as your name, aliases, birth date, SSN, etc.)
- Loans, credit lines, and credit cards (already in existence)
- Judgments, liens, and bankruptcies details
- And past credit inquiry details
Financial information is kept in credit reports by credit bureaus. Equifax, Experian, and TransUnion are the most prominent in the United States. Credit reporting agencies produce reports on consumers based on data provided by creditors and data found in public records.
FICO score
The best possible FICO score is 850, and the score range is 300 to 850. Information from credit reports is used to determine a person’s FICO score. The following components make up a person’s base FICO score:
- Payment history (35%)
- Accounts owed (30%)
- Length of credit history (15%)
- Credit mix and new credit (10% each)
What is the FICO score range?
Based on the FICO score 8, the following credit score ranges:
- Exceptional: 800+
- Excellent or Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 579 or less
Does a FICO® credit score accurately predict a borrower’s future ability to repay debt?
The Federal Reserve suggests that FICO’s credit score does connect with a borrower’s capacity to repay debt in the future, as found in research examining how closely FICO’s credit scores mirrored borrowers’ chances for defaulting on their debt. Between 2008 and 2010, it analyzed the real-world performance of borrowers in relation to their credit scores and found:
| FICO score (version 8) | Odds of loan defaulting |
| 610 | 5:1 (16.7%) |
| 645 | 10:1 (9.1%) |
| 685 | 20:1 (4.8%) |
| 705 | 30:1 (3.2%) |
| 720 | 40:1 (2.4%) |
| 735 | 50:1 (2.0%) |
| 770 | 100:1 (1.0%) |
Difference between FICO score and credit score
| Category | FICO score | Credit score |
| Scoring model | Varies between 300-850 | Depends on the issuing company |
| Industry adoption | Formally adopted by 90% of lenders | Often referred to as “educational.” |
| Excellent (720-850) | Easy-to-understand kind of scoring | Can differ from the FICO score |
| How long to create a score | Six months of data necessary | Depends on the company’s data |
Why are FICO and other credit scores important?
Your credit score is one factor a lender considers when deciding whether or not to extend credit to you for a car or home. Credit ratings let lenders screen out potentially risky customers and make swift choices based on consistent, unbiased data.
Those with high credit ratings are more likely to be approved for loans and offered competitive rates. Those with low credit ratings sometimes face higher interest rates or a complete inability to obtain financing.
Why is my FICO score lower than my credit score?
The three credit agencies don’t always share the same information, so checking your score may differ from one bureau to the next. Since VantageScore and other credit scoring options use somewhat different information, your FICO score may display lower than they do.
What is the average credit score range?
The majority of rating agencies use a scale from 300 to 850 to determine a client’s creditworthiness. It is quite unlikely that a borrower with a credit score of 300 will be approved for a loan or line of credit, whereas an individual with 850 credit score should be approved for any loan or line of credit they apply for.
What does a credit score mean to a lender?
An individual’s credit score gives lenders a quick assessment of that person’s creditworthiness. If a borrower has a good credit score, the lender may rest easy knowing they won’t have to worry about defaulting on their loan or line of credit.
Do credit scores predict a borrower’s ability to repay a loan?
Credit scores are not supposed to be definitive indicators of whether or not a borrower will be unable to meet their financial obligations. Instead, lenders utilize them as a gauge of the borrower’s likely future repayment capacity. In its report to Congress on credit scoring, the Federal Reserve provides a clear explanation: “Credit scores consistently predict relative loan performance within all population groups.”
FICO score vs. Other credit scores
The relative merits of several credit scores, including the FICO score, are very context-dependent. Nine in ten of the best financial institutions rely on FICO scores when extending credit. Lenders can use your FICO score to gauge your creditworthiness by examining your payment history, credit use, credit age, credit mix, and credit inquiries. Credit scoring models may use various criteria to reach the same conclusion.
VantageScores, like FICO scores, are calculated between 300 and 850 but place varying amounts of emphasis on factors including payment history, credit usage, and other activity. Lenders may favor FICO ratings because they predict future payment behavior more than other credit scores. However, they might employ VantageScores if they care more about a person’s debt-to-income ratio and credit use.
Bottom line
A FICO score is calculated based on your credit records’ information. Lenders look at the FICO scores of borrowers and other information on their credit records to decide whether or not to give them credit.
FAQs
Is the FICO score much higher than the credit score?
A credit score is your FICO score. But if one of your credit scores isn’t the same as your FICO score, it could be that the score you’re looking at was generated using one of the other scoring models.
Do banks use FICO or credit score?
The Fair Isaac Corporation, which is now called FICO, came up with FICO scores, which are credit scores. The company says that more than 90% of lenders use the scores to help decide if a borrower is a good credit risk.
Is your FICO score the most accurate credit score?
When it comes to getting your score from the three big credit bureaus, there is no “more accurate” score.
Is a FICO score a credit report?
A FICO score is a three-digit number based on your credit records’ information. Lenders look at the FICO scores of borrowers and other information on their credit records to decide whether or not to give them credit.
Are a FICO score and a credit score the same?
A credit score is a number that shows how good your credit is. The thing that makes a FICO score different from other credit scoring methods is that FICO makes FICO scores. The FICO credit scoring method gives credit scores based on five factors: payment history, credit usage, credit age, credit mix, and credit inquiries.
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