What is a FICO Score?
A FICO score is a credit score developed by Fair Isaac & Company. Credit scoring is a method of
determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work
with credit scoring in the late 1950s and since then, scoring has become widely accepted by
lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower's
credit history into a single number. Fair, Isaac & Company and the credit bureaus do not reveal
how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Many other companies also provide credit scoring services, and the term "FICO score" is now often
used to refer to any credit score, regardless of which scoring company provided it.
Credit scores are calculated by using scoring models and mathematical tables that assign points
for different pieces of information which best predict future credit performance. Developing these
models involves studying how thousands, even millions, of people have used credit. Score-model
developers find predictive factors in the data that have proven to indicate future credit performance.
Models can be developed from different sources of data. Credit-bureau models are developed
from information in consumer credit-bureau reports.
Credit scores analyze a borrower's credit history considering numerous factors such as:
The 3 main credit bureaus are Experian, Trans Union and Equifax. FICO is affiliated with one of
these main bureaus; the other two use their own proprietary method of credit scoring. Most
mortgage lenders and mortgage loan guidelines use the middle score of all three.
List of Credit Bureaus
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A FICO score is a credit score developed by Fair Isaac & Company. Credit scoring is a method of
determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work
with credit scoring in the late 1950s and since then, scoring has become widely accepted by
lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower's
credit history into a single number. Fair, Isaac & Company and the credit bureaus do not reveal
how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Many other companies also provide credit scoring services, and the term "FICO score" is now often
used to refer to any credit score, regardless of which scoring company provided it.
Credit scores are calculated by using scoring models and mathematical tables that assign points
for different pieces of information which best predict future credit performance. Developing these
models involves studying how thousands, even millions, of people have used credit. Score-model
developers find predictive factors in the data that have proven to indicate future credit performance.
Models can be developed from different sources of data. Credit-bureau models are developed
from information in consumer credit-bureau reports.
Credit scores analyze a borrower's credit history considering numerous factors such as:
- Late payments
- The amount of time credit has been established
- The amount of credit used versus the amount of credit available
- Length of time at present residence
- Employment history
- Negative credit information such as bankruptcies, charge-offs, collections, and public
record items such as judgments and liens - Number of recent inquiries
The 3 main credit bureaus are Experian, Trans Union and Equifax. FICO is affiliated with one of
these main bureaus; the other two use their own proprietary method of credit scoring. Most
mortgage lenders and mortgage loan guidelines use the middle score of all three.
List of Credit Bureaus
back to FAQ
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