Though they are used in the same context, the phrases "credit score" and "FICO score" have distinct meanings. Although there are certain differences you should be aware of, the two scores tell creditors about your creditability.
What is a FICO score and what does it entail for one to have this score
Specifically taken from the name of the corporation Fair Isaac Corporation (FICO), the FICO score is a credit score. Credit scores range from 300 to 850; the closer your score is to 850, the less likely the company will be to you a loan you would not be able to pay back as anticipated. Information in your credit reports from the three main credit agencies determines FICO scores: Among the main credit reporting companies functioning in the United States are Experian, TransUnion, and Equifax. Although FICO scores provide the general score depending on factors such as the payment history, the amounts owing, the duration of the credit history, the new credit, and the credit mix, they do not reveal the precise methodology utilized in their calculation. You might have more than one FICO score at any one time as the three main credit reporting companies can have somewhat diverse information about your credit history. Although there are other FICO score variations, lenders most usually utilize the FICO Score 8.
What is a credit score?
All a credit score represents is your credit rating expressed numerically. Your credit report generates your credit score, which helps lenders ascertain your creditworthiness. Still, there are other models employed in credit score calculation than FICO that should be mentioned. Another well-known example is VantageScore, which operates with scores between 300 and 850. The main distinction is that, while FICO generates scores, "credit score" might be any score from any provider using any model. All FICO scores are credit scores, hence even if all credit scores are not FICO scores.
Key Differences
FICO scores vary from other credit scores primarily in the following ways:
- Scale: Most credit ratings fall between three hundred and 850 points. In some more recent versions, on a 0-99 scale or with a different numerical rating system, nonetheless, FICO scores fall constantly between 300 and 850 points.
- Formula: FICO keeps its particular credit score calculation method secret. Other models arrive at the scores using different approaches and formulas.
- There are many flavors to FICO scores, each tailored for certain credit products like mortgages, credit cards, auto loans, etc. Generic credit scores are not product-specific, hence the customer must realize.
- Your FICO scores will show up when you review your official credit reports. The credit reporting companies may not have other credit ratings recorded.
- Availability: While other credit scores are available by all lenders or credit monitoring companies, FICO ratings may not be supplied by others.
Thus, although FICO scores have a precise definition connected with the FICO corporation, "credit score" is a more broad phrase, and credit scores and FICO have the same meaning - the degree of credit risk. Remarkably, most lenders are known to base their decisions on FICO ratings. Getting your FICO scores and scores from other models helps you to get a whole picture of your credit condition. It is clear that regardless of which of the credit ratings a lender would evaluate, one must remain dedicated to keeping high ratings.
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