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FICO Score

By Credit Factor Editorial Team | AI-assisted, human-reviewed

What is a FICO Score?

A FICO Score is a three-digit number, typically ranging from 300 to 850,
that represents your creditworthiness based on information in your credit
report. Developed by the Fair Isaac Corporation, it is generally considered
the most widely used credit scoring model by lenders in the United States.
A higher score may indicate to lenders that you are a lower credit risk,
while a lower score may suggest the opposite.

How Your FICO Score is Calculated

Your FICO Score is typically calculated using five key factors from your
credit report:

  • Payment history (35%): Whether you pay your bills on time
  • Amounts owed (30%): How much of your available credit you are currently using
  • Length of credit history (15%): How long your accounts have been open
  • Credit mix (10%): The variety of credit types you carry, such as loans and credit cards
  • New credit (10%): Recent applications for new credit accounts

Why Your FICO Score Matters

Lenders, landlords, and even some employers may review your FICO Score
when making decisions about loans, rental applications, or employment.
A strong score may help you qualify for lower interest rates, better loan
terms, and higher credit limits. Even a modest improvement in your score
may meaningfully reduce the total cost of borrowing over time.

A Practical Example

Consider two people applying for a 30-year mortgage. One applicant has a
FICO Score of 760, while the other has a score of 620. The applicant with
the higher score may generally qualify for a significantly lower interest
rate, potentially saving tens of thousands of dollars over the life of
the loan.

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