FICO Credit Score

FICO is an acronym for the creators of the FICO score, Fair Isaac Credit Organization. It is a standard credit score which makes up a substantial portion of a credit report that credit bureaus sell to lenders so they can asses an applicant’s credit risk and whether to extend them credit.

Here is a visual on how your FICO score is calculated from 5 general categories.

Source: myFICO’s About FICO scores

Here is a typical interpretation of credit scores which range from 300 to 850:

• 720-850 — Represent the best score range
• 700-719 — You can obtain favorable financing terms with this
• 675-699 — This is still a decent score range
• 620-674 — Start to have trouble obtaining favorable credit terms
• 560-619 — Have more trouble
• 300-559 — You have to improve your score

Source: Journey To Financial Freedom

It is a good idea to review your credit report regularly. Since you can get 1 free credit report per year from each of the 3 credit agencies (Equifax, Experian, and TransUnion), you can stack your request 4 months apart and be able to review your credit report year round. You can get these report from AnnualCreditReport.com.