What’s a FICO score?

In the United States, having a high FICO score can be the difference between obtaining a big loan with great terms and conditions and being offered nothing but small loans with exorbitant interest rates. It is therefore a very good idea to work towards improving your FICO score, even if you don’t have any plans to borrow money in the near future. A good FICO score can also be advantageous when you apply for a job, since some employers will see you as a more responsible person and one that is less likely to embezzle.

what is credit scoreAn individual’s FICO score is calculated by the FICO company based on information from three large credit bureaus in the United States: Equifax, Experian and TransUnion. The FICO score is the dominating measure of creditworthiness in the United States. In 2013, lenders on the U.S. market paid to see over 10 billion FICO scores.

Even though the FICO score dominates the U.S. market, it is not without competition. The list of alternatives to the FICO score includes the VantageScore, the Experian National Equivalency Score, the Equifax Credit Score, the TransRisk New Account Score, the C E Score and the Credit Optics Score.

How is my FICO score calculated?

The FICO company is keeping the exact formula for calculating a FICO score a secret. However, they have released information about things that can impact your FICO score. You can find out more about them in our article Improve your FICO score. Knowing them means that you can start working on improving your FICO score.

Different FICO scores

When we talk about the FICO score, we usually mean that classic FICO score. This is the one that runs from 300 points to 800 points.

However, the FICO company is calculating several other FICO scores as well, to better target different types of lenders looking for information. Here are a few examples:

  • Mortgage loan FICO score
  • Installment FICO score
  • Personal finance FICO score
  • Auto loan FICO score (250 points – 900 points)
  • Bankcard FICO score (250 points – 900 points)
  • NextGen FICO score (150 points – 950 points)


The company behind the FICO scores

In 1956, a company named Fair, Isaac and Company was established by William Fair (engineer) and Earl Isaac (mathematician). The two of them had met at the Standford Research Institute, and now the commenced work on a scoring system for creditworthiness. After two years, they got their first customer.

Today, FICO (it changed its name in 2009) is a big corporation listed in the New York Sock Exchange. It is headquartered in San José, California.