Creditors and lenders often refer to an individual's FICO® score when evaluating their risk of non-payment. These numerical values are oftentimes the way companies decide if they need a deposit before providing service. They're also used by lending institutions to determine the interest rate charged on a loan.
A FICO score is nothing more than a reference to the Fair Isaac credit scoring model. Variations of this model are published by each of the three major credit bureaus. The FICO model calculates credit scores using information along five dimensions, which appear below along with their weights:
Individuals seeking a FICO score calculator are going to be disappointed to learn that it's not possible to find one that provides a numerical value. Fair Isaac uses a complex and proprietary algorithm, or calculation, to develop their score.
We have as many credit calculators as any website, but you won't find a FICO calculator here for that very reason. Anyone claiming to have such a tool is misleading the public.
For the same reasons that calculators will not be found, it's not possible to find free FICO scores online either. Once again, anyone claiming to offer this service is misleading the public. Legitimate offers should cost around $15, and that is for just one of the three credit reporting agencies.
A bundle of credit scores from all three agencies (Experian, TransUnion, and Equifax) will cost around $45, while the ability to monitor a score will cost nearly $20 per month. This is arguably a good value, but not exactly free.
Figuring out if a score is good, bad, or average, is not as simple as it sounds. For argument's sake, it's possible to define a good score as anything above the national average. Right now (October 2014), the national average credit score is around 640.
VantageScore is now used by all three credit bureaus and is starting to emerge as a competitor to FICO. The national average VantageScore is 736 as of October 2014. However, the VantageScore scale is 501 to 990, which is considerably higher than FICO's range of 300 to 850. Additional information on this topic can be found in our article: National Average Credit Scores.
Unfortunately, an average can sometimes be misleading because it doesn't reveal anything about the "distribution" of scores; the table below provides this information.
|of Population||Credit Score|
|2%||300 - 499|
|5%||500 - 549|
|8%||550 - 599|
|12%||600 - 649|
|15%||650 - 699|
|18%||700 - 749|
|27%||750 - 799|
|13%||800 - 850|
What this table provides is the percentage of the national population with credit scores in the ranges indicated. From this table we know that 27% of the population has a credit score between 750 and 799. We also know that 58% (13% + 27% +18%) of the population has a credit score above 700.
Below is a short list of steps anyone can take to improve their FICO score:
While it is possible to raise the score appearing on a credit report over time, there are very few actions anyone can take to repair a score in the short term. No doubt there are many organizations offering credit repair services, but there are legal limits as to what they can actually do to fix a report.
If a credit repair offer sounds too good to be true, then it probably is too good to be true. Anyone that's been denied credit recently is entitled to a free copy of their credit report. One of the most important actions someone can take to repair their credit score is to make sure there are no errors appearing on the report.
Finally, if errors are found on a report, our article on the Fair Credit Reporting Act contains the exact steps anyone can take to correct their report, as well as the contact information for each of the three credit reporting agencies.
About the Author - FICO Credit Scores (Last Reviewed on June 30, 2016)