Credit Score and FICO: What’s the Difference?

What's the difference between your FICO score and your credit score? Are they the same thing? Learn how FICO and credit scores differ.
A man has a concerned look on his face while reading a letter as he sits at his desk
By Anna Baluch
Updated on: February 10th, 2022

A credit score is a number that shows how responsible you are when you borrow money. It considers your financial history and predicts how likely you are to repay debt. The higher your credit score is, the greater your chances of getting approved for a loan with a low interest rate and favorable terms. While the terms credit score and FICO often get used interchangeably, there are some differences between them. Let’s take a closer look at credit score and FICO.

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How Is a FICO and Credit Score the Same?

Put simply, a FICO score is a type of credit score. It’s just one of the various credit scoring models out there. Each scoring model, including FICO, uses its own unique method to calculate your credit score. Your FICO score as well as other types of credit scores can show lenders how creditworthy you are of a borrower.

How Is a FICO and Credit Score Not the Same?

Not all credit scores are FICO scores. While many lenders will use your FICO score when they evaluate your loan or credit card application, some may use other credit scoring models instead. Before you apply to borrow money, find out if the lender will consider your FICO score or a different type of credit score. This way you’ll know what they’re using to determine your creditworthiness and how likely you are to get approved.

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What Is a FICO Score?

FICO scores were created by Fair Isaac Corporation in 1989. Today, more than 90% of lenders use FICO scores when they make lending decisions.

How is a FICO score calculated?

These five factors are used to calculate FICO scores.

Payment history

Your payment history accounts for 35% of your FICO score. It reveals whether or not you make timely payments on your credit cards, mortgage, car loans, and other bills. You can keep your FICO score high if you make consistent, timely payments.

Credit utilization

Credit utilization shows how much of your available credit you actually use. It makes up 30% of your FICO score. To calculate your credit utilization ratio, add up all your balances, divide them by your total credit limits, and multiply by 100. If possible, try to keep your credit utilization to less than 30%.

Length of credit history

The length of time each of your accounts has been open is 15% of your FICO score. If your accounts have been open for quite some time and you’ve made timely payments on them, your credit score will reap the benefits.

New credit

New credit makes up 10% of your FICO score. If you open up too many credit accounts at once, your credit score may take a hit. Therefore, it’s a good idea to only apply for new credit when it’s absolutely necessary and you have a good chance of getting approved.

Credit mix

The last 10% of your FICO score is your credit mix. Your credit mix includes the different types of accounts you have open. If you have credit cards, mortgages, car loans, and student loans, your credit mix is diverse and will likely help your credit score.

What is the scoring range?

FICO scores range from 300 to 850. The higher your FICO score, the better. A higher FICO score opens the doors to loan and credit card approvals. It may also boost your likelihood of landing the interest rates and terms you want.

What can affect your FICO score?

There are a number of factors that can impact your FICO score in a positive and negative way. If you pay your bills on time, your credit score will go up. On the flip side, if you make late payments or miss them altogether, it will go down.

Also, if you use too much of your available credit, your FICO score may suffer. If you decrease your spending and pay down your balances early, however, you’ll use less of the credit at your disposal and improve your credit score.

In addition, the longer you’ve had your accounts, the better your credit score will be. Don’t close old accounts unless you absolutely have to or your FICO score will be lower than you’d like it to be. It’s important to note that factors like how often you check your own score, rent and utility payments, income, and bank balances will not have an effect on your FICO score.

Are There Other Credit Scores?

While FICO scores are the most widely used, the other types of credit scores include:

VantageScore

The three major credit bureaus, Experian, TransUnion, and Equifax created the VantageScore in 2006. It has the same range as FICO scores, 300 to 850. Even though both FICO scores and VantageScore consider payment history, VantageScore places greater emphasis on factors like credit age and utilization more. These factors are used to calculate your VantageScore.

  • Payment history
  • Type and duration of credit
  • Percent of credit limit used
  • Total balances/debt
  • Recent credit behavior and inquiries
  • Available credit

Home insurance score

If you’re in the market for home insurance, you may hear of a home insurance score. It will consider your credit report as well as your home and neighborhood. Your home insurance score will help determine the amount you’ll have to pay for home insurance. Keep in mind that each insurer has its own unique method of calculating your score.

How to Improve Your Credit Scores

Since your credit score can have a significant impact on your finances and a high one may save you thousands or even tens of thousands of dollars, here’s what you can do to improve your credit scores.

Pay your bills on time

Do your best to pay your mortgage, car loan, and other bills on time, every time. Sign up for automatic payments or set up calendar reminders on your phone so you never miss a payment. Remember that even one missed payment can lower your credit score.

Pay down your debt

Less debt means a lower debt utilization ratio and higher credit score. If you have a lot of debt, figure out how you’ll pay it off.

You may want to use the debt snowball or debt avalanche strategies to tackle your debt, get a debt consolidation loan to put all your debts in one place to make them easier to pay off, pick up a part-time job or a side hustle, or enroll in a debt management program if you’re struggling to stay afloat.

Be cautious of new credit

If you recently took out a personal loan, for example, wait to apply for a car loan. Your credit score will go down if you open too many credit accounts in a short period of time. Be sure to space out your loan applications.

Dispute inquiries as needed

If you go to AnnualCreditReport.com, you can pull free copies of your credit reports from each major credit reporting agency, Equifax, Experian, and TransUnion. If you notice any errors or inaccuracies, dispute them with the appropriate bureau as soon as possible.