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The Complete Guide to Your FICO® Score

Kailey Hagen
Robin Hartill, CFP
By: Kailey Hagen and Robin Hartill, CFP

Our Personal Finance Experts

Eric McWhinnie
Check IconFact Checked Eric McWhinnie
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Your FICO® Score is a number that decides your financial fate in many ways. While a high FICO® Score opens a lot of doors, a low FICO® Score can make life more difficult for you. You could have a harder time securing credit and encounter higher interest rates when you do. A low score can also result in having to pay security deposits for utilities and could even make it difficult to rent an apartment.

The bottom line is, it's important and it's something almost everyone has to deal with at some point in their lives. If you've ever had a loan or a credit card, you probably have a FICO® Score, and if you ever intend to use credit in the future, you need to understand what your score is and how it looks to lenders. Here's a guide to everything you need to know about those three all-important numbers.

What is a FICO® Score?

A FICO® Score is a three-digit number that lenders use to assess your creditworthiness when deciding whether to work with you.You can think of it like a financial report card, but instead of determining whether you pass or fail a class, this report card determines whether you're approved for loans or lines of credit and what interest rate you will get.

The score is based on the financial information that appears in your credit reports, which includes: 

  • Information on the types and average age of the accounts you hold
  • Your payment history
  • Your account balances, as well as credit limits and loan amounts
  • Recent credit inquiries
  • Any negative actions like bankruptcies or accounts in collection.

The FICO formula (discussed below) evaluates all of the information in your credit report and translates this into a three-digit number ranging from 300 to 850, with a higher number indicating a better score.  

It was invented back in 1989 by Fair Isaac Corporation, now known only as FICO, as a way to help lenders make decisions about borrowers more easily, without having to interpret the complexities of their credit reports. It was the first credit scoring model to arrive on the scene and it's still the most widely used today. Over 90% of lenders use it to assess risk, according to FICO's data.

How is your FICO® Score calculated?

The FICO® Score has gone through several iterations since its introduction as the company continues to update its formula to better predict risk. The FICO® Score 10, which is the latest FICO® Score, and the FICO® Score 8 -- the most widely used score -- both weigh the following five factors: 

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • Credit mix (10%)
  • New credit (10%)

Payment history

Your payment history is the single most important factor in your FICO® Score calculation, making up 35% of your score. It receives this honor because it  shows how you've managed your money in the past. Past behavior tends to be an accurate predictor of how likely you are to pay back the money you've borrowed as agreed. 

This portion of your FICO® Score looks at your payment history on your credit cards, including retail store cards, as well as mortgages and other types of installment loans, and other types of financial company accounts. Negative information, like bankruptcies and accounts in collection, also affect the payment history portion of your FICO® Score. If you have late payments on your record, the FICO model considers how late they were, how recent they were, how many of them you have across different accounts, and how much you owed.

A single late payment may not seem like a big deal, but it can drop an excellent credit score by 100 points or more, according to FICO data, so paying on time is the best thing you can do if you're trying to raise your FICO® Score or keep it high.

Amounts owed

This category looks at how much you owe on your current credit accounts and is almost as important as payment history, accounting for 30% of your FICO® Score. For installment debt -- loans with predictable monthly payments -- the FICO scoring model looks at how much you owe and how that compares to the initial amount you borrowed. 

For revolving debt, like credit cards, where the amount you owe changes from month to month, FICO looks at your credit utilization ratio. This is the ratio between the amount of credit you use each month and the amount you have available to you. So if you have a $10,000 limit on one card and your balance is $5,000, your credit utilization ratio would be 50%. Ideally, you want to keep this number below 30% and preferably as low as you can, as long as that amount is above zero.

Amounts owed is considered an important measure of your financial responsibility because a heavy reliance on credit indicates someone who's living beyond their means. Adding another loan or credit card to that mix could make it impossible for the borrower to keep up with their monthly payments.

Length of credit history

The third factor in your FICO® Score -- length of credit history -- is pretty straightforward and makes up 15% of your score. It gives lenders a more comprehensive view of how well you use credit, so a longer credit history typically translates to a higher score, assuming you've always paid on time and kept your credit utilization low. This category looks at the age of your oldest and newest credit accounts and the average age of your credit accounts, plus the length of time since each account has been used.

Closing an old credit card you no longer use may seem like a wise decision, but if it's the oldest credit account you have, doing so will bring down your average credit age and your credit score could actually take a hit. Unless it has an annual fee you don't want to pay anymore, you're probably better off keeping it in your wallet and using it for an occasional purchase.

Credit mix

Credit mix accounts for 10% of your FICO® Score, and it measures the different types of credit accounts you have. You'll have a better score if you have some revolving debt, like credit cards, and some installment debt, like a home, car, or personal loans, on your credit reports. Lenders like to see that you can responsibly manage both types of debt. Even if you have loans that are now paid off, they still count toward your credit mix.

New credit

The final category is new credit, at 10% of your FICO® Score. Research has shown that applying for a lot of new credit accounts in a short time span indicates greater risk, so you don't want to apply for a bunch of credit cards and loans within a single year. This category looks at the number of new accounts you have and the number of credit inquiries on your report.

Every time you apply for a loan or line of credit, your lender will do a hard inquiry, also known as a hard credit check, on your report which will lower your score by a few points. The FICO model takes into account normal comparison shopping behavior when applying for new credit, so it counts all credit inquiries that take place within 30 days as a single inquiry. If you are in the market for a new credit card or loan, get all your applications within one month to reduce the effect on your credit score. 

There's a common misconception that checking your own credit also lowers your credit score. When you check your own credit score, it's considered a soft inquiry and it has no effect on your credit score whatsoever.

What is a good FICO® Score?

There aren't any hard and fast rules about what constitutes a good FICO score. Each lender will have its own definition of an acceptable score, but FICO itself defines the credit score ranges as follows:

Rating FICO® Score Ranges
Exceptional 800-850
Very good 740-799
Good 670-739
Fair 580-669
Poor 300-579
Data source: FICO

If you're on the edge between poor and fair credit or fair and good credit, you should take steps to improve your credit. This will increase your odds of securing new credit or a good interest rate. Be aware that lenders typically don't disclose the minimum FICO® Score necessary in order to be approved. They may weigh other factors besides your credit score when considering your application.

Your debt-to-income ratio is the ratio between your monthly debt payments and your monthly income and it's often taken into account when you apply for new loans. If you have a FICO® Score of 650 but your debt-to-income ratio is good -- that is, your monthly debt obligations don't eat up a large portion of your monthly income -- a lender may still be willing to work with you, whereas a high debt-to-income ratio in combination with a 650 FICO score might get your application denied.

Why do I have more than one FICO® Score?

Your FICO® Scores are based on your credit reports. Most people have  three of these -- one for each of the major credit bureaus: Equifax, Experian, and TransUnion. That means that everyone also has three FICO scores. These scores are likely similar but may not be exactly the same because some lenders may not report your account details or payment history to all three credit bureaus. Lenders may look at one or more of your FICO® Scores before deciding whether to work with you, but there's no way for you to know which one was used, so you must keep all of them high.

To make things a little more complicated, FICO also offers industry-specific scores targeted toward auto lending, mortgage lending, and credit cards. These scores look at the same information as the regular FICO® Score but weigh them slightly differently to better measure risk in these specific industries.

How do I get my FICO® Score for free?

Some credit cards offer free FICO® Scores as a perk to cardholders, and a few credit unions and online banks do this as well. If you're interested in a free credit score, start by checking if any of your existing credit cards or your bank offer this service, and if not consider signing up for one that does.

Don't be fooled into thinking every free credit score is a FICO® Score, though. Many financial companies have created their own credit scoring models that weigh your credit history differently and may have an entirely different scoring system. These can give you a false sense of where your credit score actually stands because these scores aren't the same ones that the majority of lenders see. If a company offers you a free credit score and doesn't specify that it's a FICO® Score, it isn't, and it's probably not all that useful to you.

The free FICO® Scores you get through your credit card or bank may only be for a single credit bureau, so if you want to see your FICO scores for each of your credit reports or you want to see some of your industry-specific FICO scores, you'll have to pay to purchase them from FICO itself. It offers credit scores and reports for each bureau with or without credit monitoring.

How do I raise my FICO® Score?

Raising your FICO® Score isn't difficult once you understand the factors that influence your score, but it does take time. Your FICO® Scores are designed to provide a long-term view of how you've managed your money, so it takes months or even years to make a significant difference to your credit score. Over time, you can improve your score by following these tips.

Pay on time

Paying on time is the most important thing you can do to raise your FICO® Score or keep your credit score high. Set reminders for yourself or enroll in automatic payments if you struggle to remember to pay on time. You may also have to rework your budget if you're missing payments because you don't have enough money to cover all your obligations. Consider slashing your discretionary spending and working a little extra to increase your income.

Get a secured credit card if necessary

If you're having a hard time finding a lender willing to help you build or rebuild poor credit, consider getting a secured credit card. These cards require a security deposit equal to your monthly credit limit, which is usually a few hundred dollars. They're available to people with poor credit and they report your monthly payments to the credit bureaus, which can help you raise your FICO score over time. Young adults interested in establishing a credit history should also consider student credit cards.

Lower your credit utilization

Try to keep your credit utilization low if you can. When that's not possible, pay your credit card bill every two weeks instead. The credit bureaus only see your final balance each month, so making a payment mid-month can help you spend more without raising your credit utilization ratio. 

Apply for new credit cautiously

Don't be afraid to apply for new credit as needed, but do so sparingly and always complete your applications as close together as possible. Always read the fine print before you apply for a loan or credit card so you understand any fees or other expenses associated with the borrowed money. This will help you avoid surprises that could jeopardize your ability to pay on time. 

Beyond all that, improving your FICO® Score comes down to time and consistency. Keep those good behaviors going and over time, you'll see your FICO® Score continue to rise.


  • A FICO® Score is the most commonly used type of credit score, though other types of credit scores, like VantageScore, exist. No matter which scoring model is used, the same basic factors are considered, such as your payment history and credit usage.

  • Yes. Your FICO® Scores are based on your credit reports and most people have three of these -- one for each of the major credit bureaus: Equifax, Experian, and TransUnion. If you have a credit report with each bureau, you'll have three FICO® Scores.

  • Yes, start by checking if any of your existing credit cards or your bank offer your score for free.

  • If you've had a credit card or a loan in the past, you probably have a credit report with the three major bureaus. However, you might not have a credit score if you've had no account activity within the past 24 months. If it's been fewer than six months since you got your first credit card or loan, your credit history may be too new for FICO to calculate your scores.

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