The most widely used credit score is the FICO Score, but, what is it?

The FICO score is a mathematical model that is used to depict a consumers’ risk of going 90 days late on an account within the following year. Lenders use the FICO Score to help them make credit decisions every day.

FICO calculates the FICO score based only on information in consumer credit reports maintained at the credit reporting agencies. FICO credit scores range from 300 to 850.

That FICO Score is calculated by a mathematical equation that evaluates many types of information from your credit report, at that credit reporting agency. By comparing this information to the patterns in hundreds of thousands of past credit reports, the FICO score estimates your level of future credit risk.

You have three FICO credit scores, one for each of the three credit bureaus: Equifax, TransUnion and Experian. Each FICO Score is based on information the credit bureau keeps on file about you. The FICO Score from each credit reporting agency considers only the data in your credit reports at that agency.  Your credit score may be different at each of the main credit reporting agencies. If your current scores from the credit reporting agencies are different, it’s probably because the information those agencies have on you differs. If your information is identical at all three credit reporting agencies, each FICO Score should be very close.

For your FICO Score to be calculated, your credit report with the bureau from which you want your score must contain enough information—and enough recent information—on which to base your credit score. Generally, that means you must have at least one account that has been open for six months or longer, and at least one account that has been reported to the credit reporting agency within the last six months.

There are MANY different credit scores out there. There are credit scores consumers can pull themselves through credit monitoring, mortgage scores, auto scores, and many more. There are actually over 16 different credit “scorecards” that exist today with FICO alone. Each of these scorecards will reflect different credit scores. These scorecards are designed to help particular industries better gauge credit risk.

The mortgage industry for example is more concerned with a consumers past mortgage history than anything else so they weight home loan history heavier into the total score calculation than other accounts and so a consumer’s credit monitoring score might be 660. But then when they apply for a mortgage their score might be much lower due to some past negative mortgage accounts on the report. Their mortgage score might even be higher than their consumer score if they have past positive mortgage accounts.

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