FICO Credit Scores

If you've ever spoken to a creditor or lender, they may have referred to your FICO® credit score or simply your FICO score.  That's because lenders have several ways of evaluating your credit risk and your FICO score is one of the primary tools used by these institutions.

What is a FICO Score?

You're FICO score is nothing more than a reference to a credit score that was developed using the Fair Isaac credit scoring model by one of the three major credit reporting agencies.  The FICO model calculates scores credit based on information in five dimensions:

• Payment History (35% of FICO score) - account payment information with such agencies as credit cards, lenders of installment loans, mortgages and retailers.  This part of your credit score measures your ability to pay on time and the money you have past due.
• Amounts Owed (30% of FICO score) - information concerning the total amount of credit you have outstanding, number of accounts, balances on account and how much credit you have relative to the maximum creditors are willing to extend to you.
• Length of Credit History (15% of FICO score) - this dimension measures how long your accounts have been open with creditors and lenders.  The longer your credit history, the easier it is to accurately identify payment patterns.
• New Credit (10% of FICO score) - this information is used to calculate your credit score and reflects how much credit you've applied for lately.  For example, how many times you've applied for credit recently.
• Types of Credit (10% of FICO score) - this is the diversity of credit you have in your portfolio.  For example, do you have a mortgage, car loan and credit cards?  The more types of credit you have, the more accurately your score can be determined.

FICO Score Calculators

If you're looking for a FICO score calculator, you may be disappointed to learn that you won't find a calculator that provides you with a numerical value - and that's probably what you're looking for.  Fair Isaac uses a complex and proprietary algorithm / calculation to develop their score.

We've got as many credit calculators as any other website, but you won't find a FICO score calculator here for that very reason.  Anyone claiming to have an actual FICO calculator is simply misleading you.

Free FICO Scores

For the same reasons that you won't find a calculator, it's also not possible to find free FICO scores online either.  And once again, anyone claiming to offer you a free FICO score is misleading you.  Legitimate offers of FICO credit scores should run you around $15.00, and that is for just one of the three credit reporting agencies.

In fact, a bundle of credit scores from all three credit agencies will run you around $45.00, while the ability to monitor your score on a monthly basis runs around $7.95 per month - perhaps a good value, but not exactly a free score.

Good, Bad and Average FICO Scores

Figuring out if your FICO score is good, bad, or average is not as simple as it sounds.  For argument's sake, we can define a good FICO score as any score that is above the national average score.  The same rational can be used to define a bad FICO score as any score below the average FICO score.

Right now, the national average credit score is right around 678.  But an average credit score varies considerably by state.  If you're interested in a breakdown of credit scores by state, we've got those statistics in our article on National Average Credit Scores.

But an average can sometimes be misleading because it doesn't tell you anything about the "distribution" of FICO scores.  The FICO score chart below gives you a distribution of the national scores.

Table of FICO Credit Scores

FICO Scoring Example H3

What this table helps you to understand is the percentage of the national population with credit scores in the ranges indicated.  So from this table you know that 27% of the population has a credit score between 750 and 799.  And you also know that 58% of the population has a credit score above 700. 

Raising Your FICO Score

If you're FICO credit score is not exactly where you'd like it to be, there are some simple steps you can take to raise or improve your FICO score.  If you understand the elements discussed above - the components of the score - then raising your FICO score should be pretty intuitive.  For example, here is a short list of steps you can take to improve your score:

• Make your payments to creditors on time and pay the full amount owed.
• Try not to max out your lines of credit with all your creditors.  In other words, just because a credit card company extends you $5,000 in credit, that doesn't mean you have to use all $5,000 in credit.
• Don't be afraid to open new accounts, especially if you're just entering the workforce.   For example, college students shouldn't be afraid to open credit card accounts because the sooner they're opened, the more credit history you've generated.
• Don't apply for all the credit cards you want at the same time.  Your FICO score will suffer if it looks like you're scrambling to get credit from everyone in a short timeframe.
• Diversify your credit by owning car loans, mortgages and credit cards.  Again, the more information a creditor has on your account, the better.

Of course all of these tips dealing with raising your credit score assume that you're responsibly paying back your creditors and not overextending yourself.

Repairing Credit Scores

While it is possible to raise the score appearing on your credit report over time, there are very few actions you can take to repair your FICO credit score in the short term.  No doubt there are many organizations offering credit repair services, but there are legal limits as to what you can actually do to repair credit.

If a credit repair offer sounds too good to be true, then it probably is.   If you've been denied credit recently then you're entitled to a free copy of your credit report.  And one of the most important actions you can take to repair your credit score is to make sure there are no errors on that report - especially if you think you've been wrongfully denied credit.

Finally, if you believe that errors on your credit report are hurting your FICO credit score and you want to take steps you correct your report, then you may want to take a look at our article on Fair Credit Reporting Act.  In that article, you'll find the exact steps you can take to repair your report as well as the contact information for each of the three credit reporting agencies.

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