What Is a FICO Score?

You probably already know that your credit score is an indicator of your overall financial health. It might be tempting to dismiss it as "just a number," but it's the number lenders look at when they're trying to decide whether to extend credit to you.

But did you know that there are multiple types of credit scores? Today, we'll be focusing on the credit score used by the vast majority of lenders: the FICO score.

What is a FICO score?

FICO stands for the Fair Isaac Corporation, the company that developed this scoring model. Your FICO score is a three-digit number that represents your creditworthiness, or how likely you are to repay debts.

FICO scores range from 300 to 850. The higher your score, the better your creditworthiness in the eyes of lenders. A score above 670 is generally considered good, while a score above 800 is considered exceptional.

Your FICO score is calculated using data from your credit report, which is maintained by the three major credit bureaus: Equifax, Experian, and TransUnion.

How is a FICO score calculated?

Your FICO score is based on five key factors, each weighted differently:

• Payment history (35%): Whether you pay your bills on time
• Credit utilization (30%): How much of your available credit you're using
• Credit history (15%): The age of your accounts
• Credit mix (10%): The variety of credit types you have
• Hard inquiries (10%): Recent applications for new credit

FICO vs. VantageScore

FICO is not the only credit scoring model. VantageScore is another widely used model, developed jointly by the three major credit bureaus. While both models use a 300–850 scale and evaluate similar factors, they weigh those factors differently.

FICO scores are more commonly used by lenders for major credit decisions, while VantageScore is often used by free credit-monitoring services.

How to improve your FICO score

Improving your FICO score takes time and consistent effort. Here are some strategies:

• Always pay bills on time
• Keep your credit utilization below 30%
• Avoid opening too many new accounts at once
• Keep old accounts open to maintain a longer credit history
• Check your credit report for errors and dispute any inaccuracies

Services like credit-building apps can help you establish or improve your credit history. For example, Kikoff reports on-time payments to all three credit bureaus, which can help build your credit score over time.

Ready to start improving your FICO score? Create a Kikoff account today!