A FICO score is a type of credit score created by the Fair Isaac Corporation (FICO). It is widely used by lenders to assess your credit risk – essentially, how likely you are to repay borrowed money on time.
Here are the key points:
✅ Range: FICO scores generally range from 300 to 850.
✅ Higher score = better creditworthiness.
FICO Score breakdown:
|
35% |
Payment history |
Whether you pay bills on time. |
|
30% |
Amounts owed (credit utilization) |
How much of your available credit you are using |
|
15% |
Length of credit history |
How long your accounts have been open |
|
10% |
New credit |
Recent applications or new accounts |
|
10% |
Credit mix |
Types of credit you have (credit cards, auto loans, mortgage, etc.) |
Why it matters
Lenders use your FICO score to decide:
- If they will approve you for loans or credit cards.
- What interest rate you will pay.
Your credit limit.
For example, when applying for a mortgage, car loan, or credit card, a higher FICO score can save you thousands in interest over time.
Here is how FICO score ranges are generally categorized:
|
FICO Score Range |
Credit Rating |
Meaning |
|
800 – 850 |
Excellent |
You are considered an exceptional borrower |
|
740 – 799 |
Very Good |
You are seen as a very dependable borrower and will qualify for favorable rates. |
|
670 – 739 |
Good |
This is an average or typical score; most lenders consider you an acceptable risk. |
|
580 – 669 |
Fair |
You may still qualify for credit, but it will likely come with higher interest rates. |
|
300 – 579 |
Poor |
You are seen as a risky borrower; it will be difficult to get approved for many types of credit, and if approved, your rates will be very high. |
✅ Key takeaway:
A score above 740 puts you in a very strong position for loans and credit approvals with better terms.
If you are planning to finance a home purchase or refinance soon, knowing your exact FICO score helps you estimate monthly payments and qualify with confidence.