Key Takeaways
- FICO Score 8 is a credit-scoring model developed by Fair, Isaac.
- It is the model most widely used by lenders to help determine how creditworthy potential borrowers are and what interest rate they should be charged.
- FICO offers multiple credit-scoring models, and there are many available through other companies as well, such as VantageScore.
Definition and Examples of the FICO Score 8
FICO Score 8 is one of many formulas created by the Fair Isaac Corporation (FICO) to produce a credit score for individual consumers. Lenders and creditors will decide whether to loan you money or offer lines of credit and charge interest rates based on a number of factors, but the FICO Score 8 is widely viewed as a reputable source of credit assessment.
Even though it was released by FICO more than a decade ago, Score 8 is the version utilized most often by all three of the major credit reporting companies: Equifax, Experian, and TransUnion. These for-profit companies, which are also referred to as "credit bureaus," compile credit reports on borrowers, and each one offers its own FICO credit scores based on the credit information it has available. Lenders look at a potential borrower's credit reports and credit scores to make decisions about mortgage, car loan, and credit card applications.
Note
FICO Score 8 is a base score, which means that it is used to consider the risk of a borrower not making payments on any type of loan. Other types of FICO Score are used for a specific type of borrowing, such as an auto loan.
The FICO Score 8 model changed from the previous version in several key ways:
- It pays more attention to high-use credit cards. If a borrower maintains a high balance and is close to reaching a card's limit, their score probably will be lowered more than under earlier models.
- It is more forgiving of a single late payment in an otherwise solid payment history. However, it also penalizes more harshly for a pattern of late payments.
- It minimizes any benefit from credit piggybacking or tradeline renting, the practice of paying a company to have yourself added to someone else's account—without actually gaining access to their account—in order to benefit from their better credit history.
- It doesn't take into consideration debt collection accounts in which the original balance owed was less than $100.
How Does FICO Score 8 Work?
FICO doesn't reveal its exact methodology for determining credit scores. However, as with the previous version, FICO has said it gives the following percentage weights to the five credit criteria it uses in its Score 8 model.
- 35% for payment history: Includes your record of payments on all types of loans and the amounts owed (and number of them) in any delinquent accounts.
- 30% for credit utilization, or amounts owed: Includes such factors as the percentage of total available credit on all of a borrower's credit cards that is being used and the amount still owed on a loan paid in installments.
- 15% for credit age, or length of credit history: Includes the age of your oldest credit account, the age of your newest account, and the average age of all of your accounts.
- 10% for new credit, or recent applications: Includes the number of new accounts you have opened as well as the number of recent requests by lenders to review your credit reports or scores.
- 10% for mix of credit: Includes whether you have different types of credit accounts, divided into revolving (such as credit cards and home equity lines of credit) and installment (such as mortgages and student loans).
Scores range from 300 to 850, with higher scores being better. A score of 800 or more is considered to be exceptional. One from 740 to 799 is very good. One from 670 to 739 is good. One from 580 to 669 is fair. And a score of 579 or less is poor.
FICO and all three of the credit reporting companies can provide you with your FICO Score 8, though it's typically offered as part of a credit monitoring and reporting and/or identity theft protection service with a monthly charge.
Note
Your credit card company or other lender may provide you with a credit score for free.
Alternatives to FICO Score 8
FICO Score 9 is a newer version of FICO's base scoring model. Lenders may also use a competing scoring model called VantageScore.
FICO released FICO Score 9 in August 2014. There are two big changes from Score 8: Model 9 ignores collection agency accounts that have been paid off and penalizes consumers less for unpaid medical collection agency accounts.
Note
A Consumer Financial Protection Bureau study found that consumers' credit scores had unfairly suffered from medical debt collections on their records, either because the consumers were still creditworthy despite the debt or because they had already paid off the debt.
The VantageScore model was jointly developed by Equifax, Experian, and TransUnion and released in 2006. VantageScore Solutions LLC, which is jointly owned by the three credit reporting companies, holds the intellectual property rights to the model and updates it regularly. The latest version as of August 2020 is VantageScore 4.0.
FAQs
FICO Score 8 is a credit-scoring model lenders can use to make lending decisions. FICO calls FICO 8 a base score because it's designed to predict whether a person will repay debt obligations. FICO has other base scores along with industry-specific scores that are more tailored to certain loans.
What is a good FICO 8 score? ›
FICO 8 scores range between 300 and 850. A FICO score of at least 700 is considered a good score. There are also industry-specific versions of credit scores that businesses use. For example, the FICO Bankcard Score 8 is the most widely used score when you apply for a new credit card or a credit-limit increase.
Is FICO 8 or FICO 9 better? ›
Versions 8 and 9 of FICO scores are similar, but FICO score 9 is generally considered the more forgiving of the two for a few reasons: With FICO 9, third-party collections no longer hurt your credit score once those debts are paid off. FICO 9 treats medical collections differently than other types of debt.
What is a good FICO 8 score to buy a house? ›
Generally speaking, you'll likely need a score of at least 620 — what's classified as a “fair” rating — to qualify with most lenders. With a Federal Housing Administration (FHA) loan, though, you might be able to get approved with a score as low as 500.
Is FICO score 8 what lenders use? ›
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO® Score 2 (Experian) FICO® Score 5 (Equifax) FICO® Score 4 (TransUnion)
What is a good FICO 8 score to buy a car? ›
There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
How can I raise my FICO score 8 fast? ›
Selecting a few options that make sense for your current circ*mstances is a great way to build credit fast.
- Pay credit card balances strategically. ...
- Ask for higher credit limits. ...
- Become an authorized user. ...
- Pay bills on time. ...
- Dispute credit report errors. ...
- Deal with collections accounts. ...
- Use a secured credit card.
The primary credit scoring models are FICO® and VantageScore®, and both are equally accurate. Although both are accurate, most lenders are looking at your FICO score when you apply for a loan.
Is FICO score 8 still used? ›
Lenders and other businesses can decide whether to use a certain type of credit score to make lending and other decisions. According to FICO, its FICO 8 is the “score most widely used by lenders.” But some lenders might use other FICO versions, such as FICO Score 9 or 10, or credit scores from VantageScore.
Is a 900 credit score possible? ›
While achieving a CIBIL Score of 900 is technically possible, it is extremely rare. Scores above 760 are considered very good or exceptional, providing significant benefits such as lower interest rates and higher chances of loan approval.
For a $400,000 home, you'll likely need a good to excellent credit score: 740+: Best rates and terms. 700-739: Slightly higher rates.
What credit score is needed to buy a $300k house? ›
Credit Score
For a $300,000 home, you'll likely need a good credit score: 740+: Best rates and terms. 700-739: Slightly higher rates. 660-699: Higher rates, may require larger down payment.
What is the average American credit score? ›
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.
What does FICO score 8 mean on Experian? ›
The FICO Bankcard Score 8 is a FICO® Score that's created specifically for credit card issuers to help them understand the likelihood that a borrower will be 90 or more days late on a credit card payment in the next 24 months. The score has a wider scoring range—250 to 900—than the base FICO® Score range of 300 to 850.
What FICO score is excellent 8? ›
A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2023, the average FICO® Score☉ in the U.S. reached 715. Achieving a good credit score can help you qualify for a credit card or loan with a lower interest rate and better terms.
What is a FICO score vs credit score? ›
A credit score is a three-digit number that measures your financial health and how well you manage credit and debt. FICO scores are a specific type of score that lenders can use when making borrowing decisions. The FICO credit scoring system is the most widely used credit score.
How accurate is the FICO score 8? ›
Lenders and creditors will decide whether to loan you money or offer lines of credit and charge interest rates based on a number of factors, but the FICO Score 8 is widely viewed as a reputable source of credit assessment.
Is * 8 a FICO score of 600 considered good? ›
Your score falls within the range of scores, from 580 to 669, considered Fair. A 600 FICO® Score is below the average credit score. Some lenders see consumers with scores in the Fair range as having unfavorable credit, and may decline their credit applications.
How many people have a credit score over 800? ›
22% of U.S. Consumers Have Exceptional Credit
| Percentage of Consumers by FICO® Score 8 Range | |
|---|
| Range | Percentage of Consumers |
|---|
| Good (670-739) | 21.6% |
| Very good (740-799) | 28.1% |
| Exceptional (800-850) | 21.9% |
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A score of 699 is considered “Good.” With a 699 credit score, getting a mortgage, vehicle loan, or personal loan is very simple. Because it is less hazardous, lenders prefer to work with consumers who have good credit.
