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What is the Difference Between FICO Score and Credit Score?

What is the Difference Between FICO Score and Credit Score?

Whether you're seeking approval for a loan application, attempting to lease an apartment, or engaging in one of the countless other activities you need a credit score for, you may have heard the term "FICO score" before. They're two well-known little words that can pack a mighty punch to the gut when they stand between you and your dreams. But what's the difference between your FICO score and credit score?

Technically, FICO is a specific brand of available credit scores. It may differ from other scores in the way its calculation is determined, but for all intents and purposes, it is a credit score. It establishes your overall creditworthiness and the likelihood of you making on-time payments.

As the most common credit-scoring system used by major credit agencies in the U.S., it's important to understand exactly what FICO is, what each score category means, how it works, and more. This post provides an in-depth look at everything you need to know about FICO scores and how they compare to other types of credit scores lenders might use to either approve or reject your applications.

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What is a FICO score? 

Developed by the Fair Isaac Corporation (FICO), a FICO score refers to a three-digit numerical representation of your current financial health. At a glance, it essentially reveals to lenders how responsible you are when it comes to managing credit and debt. The score ranges from 300 points to 850 points, with a score on the higher end of the scale suggesting that you have a history of successfully borrowing money and paying it back on time. A lower credit score indicates that you struggle to handle your debt obligations.

Besides helping lenders evaluate what kind of risk you pose as a potential borrower, it also lets financial institutions, insurance companies, and other creditors make smarter, faster decisions about your creditworthiness. Even some utility companies will check your FICO score before setting up your terms of service.

The benefit of a FICO score to you as a borrower is that lenders are less able to approve or reject you based on a subjective judgment. Instead, credit scores are generated by major credit bureaus like TransUnion, Experian, and Equifax based on your credit report information. These agencies use a computer model to analyze your report, taking into consideration factors like your payment history, amounts owed, length of credit history, new credit accounts, and credit diversity. (More on this later.)

But why does your FICO score even matter?

Like other credit scores, your FICO score affects how much money you can borrow, your loan terms (i.e., the number of months you have to repay the debt), and your interest rate. The higher your score, the more you can borrow, the better your loan terms, and the lower your interest rate.

With this basic understanding of what a FICO score is, and how it can influence your ability to secure a line of credit, let's look at the way FICO breaks down its scoring scale into different categories and what each one means.

FICO Score Meaning

FICO has five distinct rating categories within its score range. Although every lender will decide for themselves what constitutes a good FICO score, as well as use other information within their loan approval process, each category represents a consumer's likelihood of repaying debt and the level of risk posed to the lender.

With that said, the table below breaks down FICO's model based on how FICO classifies its rating categories, the score range allocated to each category, and what each rating means.

(Side note: Before reviewing the table, it might surprise you to know that the average U.S. FICO score currently sits at 716 points even though a recent report by the Federal Reserve Bank of New York puts total household debt at a mind-boggling $15.58 trillion as of Q4 in 2021.)

FICO Rating Score Range Meaning
Poor 300-579 Well below the average FICO score of U.S. consumers, a poor score demonstrates to lenders that you're a risky borrower. Although there are some credit options available, they're limited and costly.
Fair 580-669 While slightly better, a fair score is still below average. Some lenders will approve loan applications in this category, but the terms are unlikely to be favorable.
Good 670-739 Near or above the U.S. average, most lenders are willing to extend a line of credit to borrowers with a good score.
Very Good 740-799 Very good scores are above average, revealing to lenders that you're a low-risk and reliable consumer likely to pay your debt on time. Interest rates and loan terms are typically more favorable.
Exceptional 800-850 Well above average, this score range demonstrates that you're an excellent borrower. Not only are you likely to get approved, but you'll also have access to the most competitive interest rates, loan terms, and financial product offers.

Since the information in your credit report continually changes as you apply for new credit, make payments, and engage in other financial transactions that are reported to credit bureaus, your FICO score updates frequently.

However, it's imperative to note here that you actually have more than one FICO score.

FICO creates different scoring models to work with each credit bureau's reporting system. As a result, you'll see slightly different numbers when checking TransUnion vs. Experian vs. Equifax.

In addition, the company also offers industry-specific scores that range from 250 to 900 points. For example, a car loan lender will use an auto industry-specific FICO score to determine your creditworthiness for a car loan rather than using your overall (or base) FICO score. A mortgage lender will use a mortgage-specific scoring model. This allows for a much more tailored approach.

For low-scoring individuals who have trouble securing a credit card or loan, there's also the option of the UltaFICO Score. This model can boost an overall score by 20 points, which basically gives borrowers a second chance at approval. Besides analyzing your credit report, the UltraFICO Score assesses your checking and savings account data to attain a more comprehensive view of your unique financial situation. This ultimately broadens access to more lending options and better terms.

However, if you're uncomfortable with letting FICO see your banking activity, there are multiple ways you can boost your score more organically. We cover many of them in the posts linked below.

Additional reading:

How to Build Credit without a Credit Card: 4 Helpful Ways

How to Improve Your Credit Score in 30 Days: 7 Great Tips

How to Raise Your Credit Score 100 Points Overnight

Lastly, FICO periodically releases new versions of their scoring models to account for new regulations, changing consumer behavior, and technological advances. While FICO Score 8 is the most used model, the latest version is the FICO Score 10 Suite, which includes trended data (i.e., your payment and debt history for the last 24 months).

With the adoption of newer versions taking time, not all businesses and lenders use the same scoring model. Therefore, the chances are pretty high that several different credit scores will be used depending on which FICO model each lender is currently leveraging for data.

Is your FICO score your credit score?

Yes. And also, it's complicated.

"Credit score" and "FICO score" are usually used interchangeably, but your FICO score is one of many credit scores. As mentioned earlier, FICO is just one brand—one type of credit scoring model. While different credit reporting agencies may use proprietary algorithms and weigh contributing factors differently, they all have the same goal: to measure your financial health.

To get a clearer picture of how lenders view you as a borrower, it's crucial to review your FICO score, as well as any other credit scores outside of the FICO brand.

At this point, you might be wondering what the difference is between your FICO score and other credit scores.

FICO Score vs Credit Score

Although FICO scores have become the industry standard for making accurate, fair, and fast decisions about a person's creditworthiness, non-FICO credit scores are just as relevant. If a lender is using a different score to determine whether you qualify for a loan or credit card, you'll want to know about it.

One of the strongest contenders to the FICO Score is VantageScore, an increasingly popular credit scoring system created by Experian, Equifax, and TransUnion folks. Like FICO, VantageScore creates credit risk scores by analyzing consumer credit reports. It also has a scoring scale from 300 to 850.

FICO and VantageScore evaluate much of the same information when calculating your credit score. However, VantageScore is more likely to be used when a person's credit history is lacking, and there isn't enough information to generate a FICO score report.

At a minimum, FICO requires that you have at least one account open for six months and at least one account that a creditor has reported to a credit bureau within the past six months. A VantageScore, on the other hand, only requires that your credit report has at least one tradeline showing some activity, regardless of the account's age.

But FICO and VantageScore aren't the only two options.

Equifax, for example, has developed its own credit scoring model that uses a numerical range between 280 and 850. Some financial institutions and large lenders have also built custom scoring models designed by in-house statisticians or external third parties. These models tend to use risk scores from credit bureaus as input.

Perhaps the biggest difference between FICO scores and other credit scores is that other credit scores can produce significantly dissimilar results—sometimes by up to 100 points. Even if scoring models use the same credit report information and score range, each one takes a unique approach to its calculations. Unfortunately, these vastly different scores may cause you to overestimate or underestimate your creditworthiness.

So, how does FICO calculate your score? What kind of information goes into that equation?

How FICO Score Works

Credit reports are records of your past transactions with creditors, as well as your other credit history. They include your name, address, previous and current employers, inquiries from companies checking your report, and the status of your various credit accounts. They also contain relevant public records related to your financial affairs, such as bankruptcies.

When lenders pull your credit report from one of the three national credit reporting agencies (Experian, Equifax, or TransUnion), they receive your FICO score. FICO uses several elements from the applicable report to generate that score.

While the company likes to keep its exact calculations secret, there are five main factors we do know are coded into their algorithms. These include payment history, credit utilization, length of credit history, credit diversity, and new credit. We also know how these factors are weighted, as shown in the pie chart below.

FICOs primary credit score factors

(Data Source: MyFICO)

Let's review what each of these elements mean and how they influence your score.

1. Payment History

Accounting for 35% of your FICO score, payment history is the most important metric, as it provides evidence of repayment. Creditors want to know whether you pay accounts on time and if there are any derogatory public records that constitute part of your risk assessment, including tax liens, bankruptcies, wage attachments, and civil judgments. Some of these items can impact your score for several years before they finally drop off your credit report.

When evaluating your payment history, FICO's algorithms consider:

  • payment information on all relevant credit accounts;
  • how overdue delinquent payments are;
  • how much is still outstanding on delinquent accounts or collections;
  • the number of accounts being paid;
  • adverse public records; and
  • how much time has passed since negative information was introduced to your credit report.

The best way to enhance your payment history is to pay your bills on time and get current on missed payments. The stronger your history of positive payments, the more you seem like a trustworthy borrower.

2. Credit Utilization

Also referred to as amounts owed, the second largest element of your FICO score is credit utilization, which relates to how much debt you carry in total. Although having credit accounts and having balances on them doesn't mean you're a high-risk borrower, using a lot of credit can indicate that you're overextended. Lenders then see you as having a higher risk of late payments or default.

Experts recommend that credit utilization shouldn't be more than 30% of your total credit available. In other words, if you have credit lines totaling $10,000, you should attempt to keep your credit usage at $3,000 or less.

To improve your credit score and keep your credit utilization low, be sure to pay down your balances and limit future use of your credit cards. Likewise, you should stay on top of installment loan payments like car loans and mortgages.

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3. Length of Credit History

This component of your credit score details the length of time your credit accounts have been active. Longer credit history is better since it shows your previous payment track record and consistency. However, this can be frustrating if you're just starting to build credit for the first time.

FICO looks at three key things in its calculation:

  1. The length of your credit history (specifically, the ages of your newest and oldest accounts, and the average age of all accounts)
  2. How long certain accounts have been open
  3. How long it has been since you used specific accounts

Although you can't turn back time and create a credit history earlier, you can strengthen this factor by keeping older accounts open and in good standing.

4. Credit Diversity

Lenders need to know that you have experience handling multiple types of debt, so FICO incorporates your credit diversity (a.k.a. credit mix) into your score. These types of credit accounts include both revolving accounts (e.g., credit cards and retail store cards) and installment accounts (e.g., mortgages, auto loans, personal loans, and student loans).

If you rely heavily on revolving credit, consider taking out a small personal loan and making on-time payments. If installment accounts are all you have, add a credit card or store card to your mix. Although credit diversity only accounts for 10% of your credit score, having at least one revolving credit line and one installment account can boost your score.

5. New Credit

When applying for new credit, a hard inquiry is created on your credit report, whether you're approved or not. This temporarily decreases your score and remains on your report for up to two years.

While it's perfectly okay to apply for new credit, you can look like a risky prospect to lenders if you submit too many requests in a short period. New credit only accounts for 10% of your FICO score, but it's best to spread out your credit inquiries.

Since FICO scores frequently evolve, it's difficult to measure the precise impact a single factor has on your score without reviewing your entire credit report. Your score is unique to you, so some categories may be more important than others. For example, if you haven't been using credit for long, your score will be calculated slightly differently compared to someone who has a credit history spanning several years.

Knowing the factors FICO analyzes can help keep you on the right footing moving forward.

What about other credit scores?

How Other Credit Scores Work

With some lenders calculating scores based on their own proprietary algorithms, identifying exactly how other credit scores work is a little tricky. Fortunately, many credit scoring systems base their results on similar factors to FICO's scoring model, with specific criteria and considerations varying slightly.

VantageScore, for example, breaks down their model and how they weigh contributing factors to their calculations as follows:

  • Total credit usage, balance, and available credit (weight: extremely influential)
  • Credit mix and experience (weight: highly influential)
  • Payment history (weight: moderately influential)
  • New accounts opened (weight: less influential)
  • Age of credit history (weight: less influential)

Ultimately, all credit scores work on credit report data that will help lenders better understand your existing debt burden and how trustworthy you are when it comes to repaying what you owe. Ask lenders about their approval criteria and which scoring model they leverage so that you have a better idea of what to expect.


FICO scores are predictive tools for lenders, helping them gauge your ability and commitment to paying off debt. As a borrower, the upside for you is that a good FICO score can save you thousands of dollars in fees and interest. The more you work on improving your score, the easier it will get to secure credit, better interest rates, and favorable loan terms.

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