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About Credit Scores

 

Introduction | What's in Your FICO® Score | What's Not in Your FICO® Score | Credit Score Facts and Fallacies


 

When you apply for credit — whether for a credit card, a car loan or a mortgage — lenders want to know what risk they’d take by loaning money to you. FICO® scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your three FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scoes can help you qualify for better rates from lenders.
 

For your three FICO scores to be calculated, each of your three credit reports must contain at least one account that has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months. This ensures that there is enough information — and enough recent information — in your report on which to base a FICO score.
 

About FICO scores


Credit bureau scores are often called “FICO scores” because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac Corporation (FICO). FICO scores are provided to lenders by the major credit reporting agencies.

FICO scores provide the best guide to future risk based solely on credit report data. The higher the credit score, the lower the risk. But no score says whether a specific individual will be a “good” or “bad” customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rate.


Other Names for FICO Scores


FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac, and have been rigorously tested to ensure they provide the most accurate picture of credit risk possible using credit report data.

 

Credit Reporting Agency FICO Score
Equifax BEACON®
Experian Experian/FICO Risk Model
TransUnion FICO® Risk Score


 

More Than One Credit Score


In general, when people talk about “your score,” they’re talking about your current FICO score. However, there is no one credit score used to make decisions about you. For example:

 

  • Credit bureau scores are not the only scores lenders use to evaluate your credit. Many lenders use their own credit scores, which often will include the FICO score as well as other information about you.
     
  • FICO scores are not the only credit bureau scores. There are other credit bureau scores, although FICO scores are by far the most commonly used. Other credit bureau scores may evaluate your credit report differently than FICO scores, and in some cases a higher score may indicate more risk, not less risk as with FICO scores.
     
  • Your credit score may be different at each of the main credit reporting agencies. The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the credit reporting agencies are different, it’s probably because the information those agencies have on you differs.
     
  • Your FICO score changes over time. As your data changes at the credit reporting agency, so will any new credit score based on your credit report. So your FICO score from a month ago is probably not the same score a lender would get from the credit reporting agency today.


The information provided by Fair Isaac Corporation is used with permission. Copyright © Fair Isaac Corporation. All rights reserved. Further use, reproduction, or distribution is governed by the Fair Isaac Copyright Usage Requirements, which, along with further information on credit, credit scoring, and related topics, can be found at www.myfico.com. Fair Isaac®, FICO®, myFICO®, and other marks are trademarks of Fair Isaac Corporation.
       
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