Young woman checking her credit score

FICO® Score Breakdown: Understanding Your Credit

Personal Finance

You probably know your FICO® Score is important, but you might not understand what it actually is or what information is taken into account. In its most basic form, a FICO® Score is a simple three-digit number that helps predict your borrowing reliability, but it’s more complex than that. Below, with the help of FICO, you’ll gain a better understanding about the ins and outs of FICO® Scores and overall credit.

The following content was created by FICO.

What is FICO?

FICO, formerly known as Fair Isaac Corporation, is the company that invented FICO® Scores. Starting in the 1950s, FICO sparked a revolution in credit risk assessment by pioneering credit risk scoring for credit grantors. This new approach to measuring risk enabled banks, retailers, and other businesses to improve their performance and to expand consumers’ access to credit. Today, FICO® Scores are widely recognized as the industry standard for measuring credit risk.

What is a credit score?

A credit score is a number summarizing your credit risk, based on your credit data. A credit score helps lenders evaluate your credit profile and helps determine your loan and credit card approvals, interest rates, credit limits, and more.

What are FICO® Scores?

How are FICO® Scores different than credit scores?

Not all credit scores are FICO® Scores. Since FICO® Scores are used in more than 90% of U.S. credit lending decisions1, knowing your FICO® Scores is the best way to understand how potential lenders could evaluate your credit risk when you apply for a loan or credit. Other credit scores, which use scoring formulas different from FICO’s, may not give you an accurate representation of the scores your lender uses when assessing your credit profile.

What goes into FICO® Scores?

What’s left out of FICO® Scores?

FICO® Scores consider a wide range of information on a credit report. However, they do NOT consider:

  • Race, color, religion, national origin, age, sex, and marital status
  • Salary or other employment information
  • Where the consumer lives
  • Any interest rate being charged on a credit card or other account
  • Any items reported as child/family support obligations
  • Any information not found in the credit report

What is a good FICO® Score?

FICO® Scores generally range from 300 to 850, where higher scores demonstrate lower credit risk and lower scores demonstrate higher credit risk. Each lender has its own standards, but this chart can serve as a general guide of what a FICO® Score represents.

FICO Score Ranges
Score RangeRatingWhat FICO® Scores in This Range Mean
800 or higherExceptional• Well above the average score of a U.S. consumers
• Demonstrates that the consumer is an exceptional borrower
740 to 799Very Good• Above the average of U.S. consumers
• Demonstrates that the consumer is a very dependable borrower
670 to 739Good• Near or slightly above the average of U.S. consumers
• Most lenders consider this a good score
580 to 669Fair• Below the average of U.S. consumers
• Some lenders will approve loans with this score
Under 580Poor• Well below the average of U.S. consumers
• Demonstrates that the consumer is a risky borrower

What is a typical FICO® Score for someone new to credit?

FICO® Scores are generated by complex mathematical algorithms based on unique credit report data, so there is no “typical” or “entry-level” score. While someone new to credit may have difficulty immediately scoring in the highest ranges, it is possible to have a FICO® Score that meets lenders’ criteria for granting credit.

How can I manage my credit and FICO® Score responsibly?

How long will negative information remain on my credit files?

It depends on the type of negative information. Here’s the basic breakdown of how long different types of negative information will remain on your credit files:

  • Late payments: 7 years
  • Bankruptcies: 7 years for a completed Chapter 13, and 10 years for Chapters 7 and 11
  • Foreclosures: 7 years
  • Collections: About 7 years, depending on the age of the debt being collected

Keep in mind, the older the negative item is, the less it will affect your FICO® Scores.

Are FICO® Scores unfair to minorities?

No. FICO® Scores do not consider your gender, race, nationality, or marital status. In fact, the Equal Credit Opportunity Act prohibits lenders from considering this type of information when issuing credit. Independent research has shown that FICO® Scores are not unfair to minorities or people with little credit history.

1 Mercator Advisory Group, Analysis, 2018

FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

Connexus Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Connexus Credit Union and Fair Isaac do not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.