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A credit score is a number from 300 to 850 that depicts a consumer’s creditworthiness. A FICO Score is a specific type of credit score that uses a different scoring model based on data in your credit report.
If you’ve ever applied for a credit card, an auto loan or a mortgage, you know that one of the main requirements in the process is to share your credit score. Lenders require a credit score because it tells them about your creditworthiness, or how likely you are to pay back a loan based on your credit history in your credit report.
Given the variety of credit scores available, there is often confusion around which score to use. Lenders most frequently use Your FICO® Score. In fact, 90 percent of top lenders use FICO Scores to make loan decisions.
Keep reading to learn more about FICO Scores vs. credit scores, as well as how to improve your score so you can look promising to lenders.
A credit score is a number ranging from 300 to 850 that depicts a consumer’s creditworthiness. Basically, a credit score predicts how likely you are to pay back a loan on time.
A higher credit score often indicates that you borrow and repay your debts on time—which is a good sign to lenders. On the other hand, a lower credit score may signal to lenders that you are having problems managing your debt.
Your credit score is calculated in a variety of methods, which is why it may appear differently from one source to another. That’s where credit scoring models come in, one of the most popular being FICO Scores.
A FICO Score is a type of credit score that is based on the data in your credit report. The company that created this scoring methodology is known as Fair Isaac Corporation, or FICO.
This score is frequently used for significant loans, including home mortgages and auto loans, but it’s also common for background checks or rental property applications.
How is a FICO Score determined, then? FICO uses five different categories to calculate your score.
Here’s a breakdown by percent:
It is always in your best interest to make all of your payments on time and in full as payment history has the most impact on a FICO Score.
A good FICO Score is generally at least 670.
A FICO Score ranges from 300 to 850, with 300 indicating a “poor” or low score and 850 indicating an “excellent” or high score.
A FICO Score of at least 670 is generally regarded as good. If your score falls above this number, you may be eligible for loans with fair or even low interest rates.
On the other hand, a credit score below 670 is regarded as fair or poor and makes it more difficult to obtain a competitive interest rate. If your score is extremely low—typically at or below 580—you can potentially be turned down for a loan.
FICO Score vs. credit score: what’s the difference + which is better?
So, is a FICO Score the same as a credit score? Essentially, a FICO Score is a type of credit score. The main difference between a FICO Score and other credit scores is how they are calculated.
When determining which credit score is better, it really depends on how the scores are being calculated and what they are being used for. Like mentioned before, FICO Scores emphasize payment history, credit utilization, credit age, credit mix and credit inquiries to help lenders determine your likelihood of repaying loans. Other credit scoring models, such as VantageScores, consider different factors to make the same determination.
Similar to FICO Scores, VantageScores have a range of 300 to 850, but the weighting factors differ slightly from FICO:
In order to determine whether a borrower will be likely to repay their debt, a lender may choose to use VantageScores if they are more concerned with credit use and debt levels.
Really, the score you use depends on the lender’s preference, but you can’t go wrong by using your FICO credit score or VantageScore. There are other alternative credit scores such as insurance and lender-based scores, but those are only relevant in special circumstances. Read our post on the different types of credit scores to learn more.
A FICO Score is essentially a kind of credit score. A FICO Score and other credit scores are calculated differently, which is the fundamental distinction between them.
What matters most when deciding which credit score is better is what they are used for.
Lenders may choose to use FICO ratings over other scores to assess a borrower’s likelihood of repaying their debt. However, if credit utilization and debt levels are more important to them, they might decide to use VantageScores.
Your credit score may differ from one source to another because it is calculated differently depending on which scoring model you use.
If you discover you have a poor FICO Score, don’t fret. It’s never too late to make improvements.
Here are some actions you may take to improve your credit score:
Lenders can use FICO credit scores and other credit scores as a forecast tool to assess your capacity and resolve to repay debt. No matter the credit scoring model lenders use, it’s critical to think about how you can obtain the highest score possible.
Don’t be discouraged if you’re looking through your credit report and you don’t like what you see. Create financial objectives for yourself to help you better your credit over time. If you need assistance with your credit, CreditRepair.com will help you in disputing errors and monitoring your credit on your behalf.
Note: The information provided on CreditRepair.com does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only.
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