The FICO credit score condenses your entire history as a borrower into a tidy three-digit number. That number ranges from 300-850 and is tabulated separately by each of the three credit reporting agencies.
FICO doesn’t reveal exactly how it formulates a credit score. But the company does provide a more broad-based look at how it all comes together.
So, let’s take a look at the five big factors that make up your FICO score:
Remember: Not all creditors report data to the credit bureaus. Those who do may not report to all three agencies. That means you might have three different FICO scores, one from Equifax, one from Experian and one from TransUnion.
Mortgage lenders will request your credit score from each of them. If the scores are different, and they very often are, lenders will typically use the median, or middle, score as your official credit score.
For example, if Equifax shows a 640, Experian shows a 685 and TransUnion shows a 659, a lender will use 659 – which is the median of those three figures – as your credit score for qualifying purposes.
|Credit Score||Percentage of Consumers|
|800 and above||19.9 percent|
Source: FICO Scores, April 2015 Distribution
Remember, too, that there isn’t just one type of FICO score. There are dozens and dozens of different scoring formulas depending on the type of financing you’re seeking. A mortgage lender, a car dealer and a credit card company could pull your credit and come up with three different versions of your credit score.
So, if you pay to see your credit scores, understand that you’re seeing a basic score, not an industry-specific one. The scores that mortgage lenders or auto dealers see are tailored for their financing niche.
That means what you see as your credit score and what lenders see can be two different things.