A FICO score is a credit scoring system developed by the Fair Isaac Corporation (FICO). FICO creates the formulas that take information from credit reports and use it to calculate credit scores.
Like other credit scores, FICO scores reflect the lending risk represented by the information in your credit history at the moment the score is calculated.
When calculating credit scores, FICO can use information provided by any one of the three major credit reporting agencies: Experian, TransUnion or Equifax. You have three credit reports, but you can have many different credit scores.
FICO offers several different credit scoring formulas that are tailored for use in different types of lending. Therefore, the type of scoring model used when you are purchasing a car may be different from the one that is used when you apply for a home loan.
The term “FICO scores” is often incorrectly used to describe credit scores in general. There are in fact a number of different credit score developers. Perhaps the best known competitor to FICO is VantageScore, LLC, but there are others as well.
Ask your lender or the source of the score you received what score you are receiving, what the scale is and most importantly what the risk factors are from your credit report that most affected the score. The numbers can vary considerably depending on the scoring range that is used.
The risk factors, though, are very consistent from one score to another. Use the risk factors to improve your credit history and all of your credit scores will improve.
Check out the scope to hear answers to all the questions asked:
Do you have questions about credit?
Join our live video chat every Tuesday and Thursday at 3:00 p.m. ET on Periscope. Rod Griffin, Director of Public Education at Experian, is available to answer your questions live.
Scoped on: 1/31/2017