FICO Score
CreditGlossary term
Definition
A credit score developed by the Fair Isaac Corporation, ranging from 300 to 850, that lenders use to evaluate your creditworthiness. It is calculated based on five factors: payment history, amounts owed, length of credit history, new credit, and credit mix. A higher FICO Score generally means better loan terms and lower interest rates.
Related terms
- VantageScoreA credit scoring model created jointly by the three major credit bureaus (Equifax, Experian, and TransUnion) as an alternative to the FICO Score. It also ranges from 300 to 850 and uses similar factors but weighs them slightly differently. VantageScore can generate a score with as little as one month of credit history, making it useful for people with thin files.
- Credit ReportA detailed record of your credit history maintained by credit bureaus, including your accounts, payment history, balances, and any public records like bankruptcies. Lenders, landlords, and sometimes employers review your credit report to assess your financial reliability. You are entitled to one free credit report per year from each of the three major bureaus through AnnualCreditReport.com.
- Payment HistoryA record of whether you have paid your credit accounts on time, which is the single most important factor in calculating your credit score. Even one late payment can significantly lower your score, and the impact increases with the severity of the delinquency. Consistent on-time payments over many years build a strong credit foundation.
Get advice that uses your real numbers
Warren reads your accounts and explains what terms like this mean for your plan. Free to start, no credit card required.