What is a FICO® Score?
- A three-digit number calculated from the credit information on your credit report at a CRA at a particular point in time
- It summarizes information in your credit report into a single number that lenders can use to assess your credit risk quickly, consistently, objectively and fairly
- Lenders use FICO® Score to estimate your credit risk- how likely you are to pay your credit obligations as agreed
- It helps you obtain credit based on your actual borrowing and repayment history, without consideration of prohibited types of information such as race or religion
What is a good FICO® Score?
The point above which a lender would accept a new application for credit, but below which, the credit application would be denied, is known as the "score cutoff". Since the score cutoff varies by lender, it's hard to say what a good FICO® Score is outside the context of a particular lending decision.
FICO Score
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What it Means
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| 800 or Higher |
- The FICO® Score is in the top 20% of U.S. Consumers
- Demonstrates to lenders that the consumer is an exceptional borrower
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| 740 to 799 |
- The FICO® Score is in the top 40% of U.S. Consumers
- Demonstrates to lenders that the consumer is a very dependable borrower
|
| 670 to 739 |
- The FICO® Score is near the average score of U.S. Consumers
- Most lenders consider this a good score
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| 580 to 669 |
- The FICO® Score is below the average score of U.S. Consumers
- Some lenders will approve loans with this score
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| Lower than 580 |
- The FICO® Score is in the lowest 20% of U.S. Consumers
- Demonstrates to lenders that this consumer is a very risky borrower
|
For more information on understanding your FICO® Score, click here.
*Arrowhead Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Arrowhead 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. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries. © 2014 Fair Isaac Corporation. All rights reserved.
Key Score Factors
When a lender receives your FICO® Score, "key score factors" are also delivered, which are the top factors that affect the score. Addressing some or all of these key score factors can help you improve your financial health over time. Having a good FICO® Score can put you in a better position to qualify for credit or better terms in the future.
FICO® Scores take into consideration five main categories of information in a credit report.
1. Payment History
2. The Amounts You Owe
3. Length of Credit History
4. New Credit
5. Types of Credit in Use
*Arrowhead Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Arrowhead 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. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries. © 2014 Fair Isaac Corporation. All rights reserved.
Does my FICO® Score change every month?
According to FICO, 83% of the population experiences changes to their FICO® Score by up to 20 points month to month. As the information in your credit report changes, your FICO® Score may also change and we provide it monthly so you can track it over time.
What is the lowest and the highest possible FICO® Score?
The classic FICO® Scores which are in use today by the vast majority of lenders all fall within the 300-850 score range.
What are the minimum requirements to produce a FICO® Score?
There's really not much to it; in order for a FICO® Score to be calculated, a credit file must contain these minimum requirements:
- At least one account that has been open for six months or more
- At least one undisputed account that has been reported to the credit reporting agency within the past six months
- No indication of deceased on the credit file (Please note: if you share an account with another person and the other account holder is reported deceased, it is important to check your credit file to make sure you are not impacted.)
Who or what is FICO?
Founded in 1956, Fair Isaac Corporation (FICO) uses advanced math and analytics to help businesses make smart decisions. One of FICO's inventions is the FICO® Score, which is the most widely used credit score in lending decisions.
How is credit history established?
There are a few ways to establish a credit history, including the following:
- Apply for and open a new credit card. A person with no or little credit history may not get very good terms on this credit card - such as a high annual percentage rate (APR). However, by charging small amounts and paying off the balance each month, you won't be paying interest each month so the high APR won't hurt your financial position.
- Open a secured credit card. Those unable to get approved for a traditional credit card may open a secured credit card to build a credit history, provided the card issuer reports secured cards to the credit bureau.
How long will negative information remain on my credit file?
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 file:
- Late payments: 7 years
- Bankruptcies: 7 years for a completed Chapter 13, and 10 years for Chapters 7 and 11
- Foreclosures: 7 years
- Collections: Generally 7 years, depending on the age of the debt being collected
- Public Record: Generally 7 years, although unpaid tax liens can remain indefinitely
Keep in mind: For all these negative items, the older they are, the less impact they will have on your FICO® Score.
Where can I find out more about my credit?
It is a good practice to review your credit report from the three national credit bureaus; TransUnion, Equifax, and Experian at least once a year and especially before making a large purchase, such as a house or car.
Federal law allows you to get a free credit report annually from these three national credit bureaus that has set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual credit report(s):
www.annualcreditreport.com
(877) 322-8228
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
For a complete list of Frequently Asked Questions, click here.
*Arrowhead Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Arrowhead 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. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries. © 2014 Fair Isaac Corporation. All rights reserved.
