Your FICO score doesn’t just decide if you’re approved—it decides how much you’ll pay. A good score can save you thousands in interest. A low one can cost you just as much.
Lenders use this three-digit number to size you up when you apply for a mortgage, auto loan, or credit card. It’s one of the most important numbers in your financial life.
This guide breaks down how FICO scores work, how they’re calculated, and what you can do to improve yours.
What is a FICO score, and why does it matter?
Your FICO score is a three-digit number that shows lenders how likely you are to repay borrowed money. It’s calculated using the information in your credit report, and it ranges from 300 to 850.
Lenders rely on your FICO score because it helps them predict risk. A higher credit score tells them you’re less likely to miss payments. A lower score signals you may be a riskier borrower.
This one number affects whether you’re approved for loans, credit cards, or even rental housing. But it also impacts how much you’ll pay. If your credit score is high, you can qualify for lower interest rates, higher limits, and better terms. A lower score means you’ll pay more—sometimes a lot more—over time.
How FICO Scores Are Calculated: The 5 Key Factors
Your FICO score is based on five factors from your credit report. Each factor plays a role, but some carry more weight than others.
- Payment history (35%) – This tracks whether you pay your bills on time. Missed or late payments are one of the fastest ways to lower your FICO score. Set up autopay or reminders to avoid late payments.
- Amounts owed (30%) – Also known as credit utilization. It measures how much of your available credit you’re using. Keep your credit card balances under 10% of your limit if possible.
- Length of credit history (15%) – Lenders like to see a long track record of responsible credit use. Keep old accounts open, even if you rarely use them.
- New credit (10%) – Opening several accounts at once can lower your score because it signals potential risk. Space out credit applications and only apply when needed.
- Credit mix (10%) – Having a mix of accounts (like credit cards, loans, and mortgages) can boost your FICO score. Don’t open new accounts just for credit mix, but know it helps over time.
FICO Score Ranges and What They Mean
Here’s a breakdown of the FICO score range and what each category means:
| FICO Score | Rating | What It Means |
|---|---|---|
| 300–579 | Poor | You’re seen as high risk. Approval is tough, and interest rates are the highest. |
| 580–669 | Fair | You may get approved but likely with higher rates and stricter terms. |
| 670–739 | Good | You’re a solid candidate. Most lenders will offer reasonable rates. |
| 740–799 | Very Good | You’re seen as low risk. You’ll likely qualify for low rates and better offers. |
| 800–850 | Excellent | You’re in the top tier. You’ll get the best terms and highest approval chances. |
Even a 30-point jump can save you thousands over the life of a loan.
How much can your FICO score cost you?
Your credit score doesn’t just influence approval—it shapes your interest rate, monthly payment, and the total cost of borrowing. Here’s a real-world example using a $250,000 30-year fixed mortgage:
| FICO Score Range | Estimated Interest Rate | Monthly Payment | Total Interest Paid (30 Years) |
|---|---|---|---|
| 760–850 | 6.0% | $1,499 | $289,640 |
| 700–759 | 6.5% | $1,580 | $320,800 |
| 620–699 | 7.5% | $1,748 | $379,280 |
As you can see, a lower score means higher costs—often by tens of thousands of dollars over time.
Want to save money? Start by improving your FICO score. A few smart changes can pay off in a big way.
General vs. Industry-Specific FICO Scores
Most people only see one FICO score—but lenders have options. Some use the general score. Others use industry-specific versions that focus on one type of loan.
The general FICO score ranges from 300 to 850. It’s the most common version and is used to evaluate your credit for personal loans, credit cards, and general creditworthiness.
Industry-specific FICO scores are tailored to specific lending situations. These scores range from 250 to 900 and are used for:
- Auto loans – Predicts how likely you are to repay a car loan.
- Mortgages – Helps lenders assess your risk for a home loan.
- Credit cards – Focuses on how well you manage revolving credit.
That’s why your score might vary depending on who pulls it. One lender may use a general score, another may use a version specific to auto or mortgage lending.
Different Versions of FICO Scores
FICO doesn’t just offer one version. Over time, the Fair Isaac Corporation has released updated models to reflect changing credit behaviors.
FICO 8 is still the most widely used version, but FICO 9 introduced some helpful changes:
- Paid collection accounts no longer hurt your credit score.
- Medical debts have less impact.
- Rental history (if reported) now counts toward your score.
The most recent models—FICO 10 and 10T—go even further. FICO 10T includes “trended data,” which looks at your credit behavior over time instead of just at one moment.
However, many lenders still use older versions like FICO 8 or even FICO 2, 4, or 5 (especially for mortgages). That’s why your credit score can differ depending on the lender and the version they use.
FICO vs. VantageScore vs. TransRisk
Not all credit scores are created equal. Here’s how the most common ones compare:
| Score Model | Range | Who Uses It | Key Features |
|---|---|---|---|
| FICO | 300–850 | Over 90% of lenders | Most trusted, used for approvals and interest rates |
| VantageScore | 300–850 | Some lenders, free credit tools | Can score shorter histories, free via some credit sites |
| TransRisk | Varies | Consumers only | Not used by lenders, found on sites like Credit Karma |
FICO is still the standard. It’s the one lenders rely on most when making real decisions about your credit applications.
How to Check Your FICO Score for Free
You don’t always have to pay to see your FICO score. Many banks and credit card issuers offer it for free.
Places you can check:
- Discover Credit Scorecard
- American Express
- Bank of America
- Citibank
- Experian.com (offers FICO score, not just credit report)
Watch out for educational scores. Some free services only show VantageScore or TransRisk, which aren’t the same scores most lenders will use.
To see your real FICO score, always check the source—and make sure it says “FICO.”
See also: Credit Cards That Give Free FICO Scores
How to Improve Your FICO Score
Raising your FICO score takes consistency—not quick fixes. These proven strategies can help you build credit, lower risk factors, and fix the issues holding your score back.
Build Positive Credit History
Lenders want to see that you can manage credit responsibly over time. These steps can help you create or strengthen a solid credit track record.
- Apply for a secured credit card: Secured cards require a cash deposit, which becomes your credit limit. Use it for small purchases and pay in full each month. Make sure the issuer reports to all three credit bureaus.
- Get a credit-builder loan: With credit builder loans, the lender holds the loan funds in a savings account while you make monthly payments. When the loan is paid off, you get the money—and a history of on-time payments added to your credit report.
- Become an authorized user: If someone with strong credit adds you to their card, their positive payment history may help improve your credit score. Just be sure the issuer reports authorized users.
Lower Your Credit Utilization
Using too much of your available credit can hurt your score, even if you always pay on time. Here’s how to keep it in check.
- Pay down credit card balances: Aim to use less than 30% of your total available credit—and under 10% if you’re trying to boost your credit score quickly.
- Avoid opening too many new accounts: Each new application triggers a hard inquiry and lowers your average account age. Only apply when necessary.
- Keep older accounts open: Closing old credit cards can shrink your available credit and shorten your credit history, both of which can lower your score.
Fix What’s Hurting Your Score
Sometimes errors or missed payments are the biggest problem. These tips can help you recover lost points and avoid further damage.
- Make every payment on time: Payment history is the most important part of your FICO score. Late payments stay on your credit report for up to seven years.
- Dispute credit report errors: Incorrect late payments, duplicate debts, or outdated accounts can hurt your score. Learn how to dispute credit report errors.
- Get professional help if needed: If your credit is in rough shape, or you’re overwhelmed, consider working with a credit repair company. Here are some of the best credit repair companies.
Common FICO Score Myths
Let’s clear up a few things people often get wrong about FICO scores:
- “Checking my score will lower it.”
False. Soft inquiries (like checking your own score) have no impact. - “Income affects my score.”
It doesn’t. FICO only looks at how you manage credit—not your salary. - “Closing a card improves your score.”
Not usually. It can shorten your credit history and raise your credit utilization.
Why Your FICO Score Might Suddenly Drop (And What to Do)
Credit scores can change quickly, and sometimes the reason isn’t obvious. Here’s what to look for:
- Missed or late payment – Even one late payment can cause a big dip.
- High credit utilization – Using too much of your available credit hurts your score.
- New hard inquiry – Applying for new credit can temporarily lower your score.
- Errors or fraud – Check your credit reports for accounts or activity you don’t recognize.
What to do:
Pull all three credit reports, identify the cause, and dispute anything that’s wrong. Keep your balances low and make payments on time going forward.
Other Ways Your FICO Score Affects Your Life
Your FICO score isn’t just for loans. It can show up in places you wouldn’t expect:
- Renting an apartment – Landlords may check your score to decide if you’re a trustworthy tenant.
- Setting utility deposits – A low score could mean a bigger upfront deposit.
- Getting insurance – Some insurers use credit-based scores to set rates.
- Job applications – In some states and industries, employers may review credit reports as part of background checks.
Final Thoughts
Your FICO score can either save you thousands or cost you just as much. It affects everything from loan approvals to credit card rates and even renting a place to live.
But the good news? It’s one of the few financial tools you can actively improve. Start small—pay on time, lower your balances, and check your reports regularly.
One step today can lead to better credit—and better options—tomorrow.
Frequently Asked Questions
What factors do not affect my FICO score?
Your FICO score ignores personal details like your age, gender, salary, job title, or where you live. While lenders might look at income or employment during the application process, none of that affects your actual credit score.
How often does my FICO score update?
Your FICO score can update as often as your credit report changes. This depends on when lenders report new activity, which could be daily, weekly, or monthly. If you pay down a balance or open a new account, it may show up within a few days to a few weeks.
What is a good FICO score for refinancing a loan?
A FICO score of 680 or higher can help you qualify for a refinance, but you’ll likely need a 720 or above to get the lowest interest rates. The higher your score, the more you’ll save over the life of the loan.
Can I have different FICO scores on the same day?
Yes. You can have different FICO scores at the same time because each credit bureau—Experian, Equifax, and TransUnion—may hold different data. Your score also depends on which FICO version a lender uses.
Which FICO score do mortgage lenders use?
Most mortgage lenders use older versions of the FICO score—specifically FICO 2, 4, or 5—depending on the bureau. That’s why your mortgage score may be lower than the one you see online or through credit card apps.
