What is a FICO Score? Everything Homebuyers Need to Know

If you’re considering purchasing a home, it’s likely you’ve heard of a FICO score.

While most buyers understand that this is a credit score, few understand the background and history of the FICO score, or what exactly comes together to comprise it.

Luckily, we’re here to offer some answers.

Read on to learn more.

What is a FICO Score?

A FICO score is, first and foremost, a credit rating. The name comes from the company that developed the score, FICO, which specializes in information used to predict individual outcomes.

Because FICO specializes in predictive analytics, the information in a score is meant to predict a would-be buyer’s future financial behavior, and how risky or reliable they will be to lend money to.

How FICO Scores Are Developed

To calculate a score, FICO pulls information offered by Equifax, Experian, and TransUnion, the three largest credit reporting agencies out there. This is where an important distinction must be made – while they uses information from these credit reporting agencies to develop a credit score, FICO itself is not a credit reporting agency.

What Information Compiles to Create a FICO Score?

FICO scores range from 300-850 and rely on a selection of different information to determine a number. The higher the credit score, the less risk associated with the borrower. As a general rule, the following information is all compiled to create a credit score:

• How much debt the borrower owes
• Payment history (late payments, etc.)
• Age of the borrower’s credit history (old credit helps improve credit scores)
• Number of new credit inquiries the buyer has made
• The types of credit the borrower has (credit cards, car loans, etc.)

While a FICO score is not the only credit score out there, it is one of the most extensive, which is why so many lenders use it. Borrowers who score well on a FICO score are very likely to score well elsewhere, also.

Where to Get Your FICO Score

While there are many places to access your score, the following are some of the most common:

Citibank

If you have a credit card through Citi, you can access your FICO score through your credit card platform. While the credit range offered is different than the standard score (350-900 rather than 300-850), it’s still a reliable way to get a feel for where your credit is currently sitting.

American Express

American Express also offers access to scores for users. The company makes use of data provided by Experian to provide current FICO scores for customers.

Discover

Discover offers users of its Discover It card a free FICO score on each statement they receive. Discover also offers a free credit scorecard to everyone – even users who aren’t otherwise Discover card holders.

The FICO Score: An Important Number to Know

While the FICO score may seem like an obscure measurement, it affects everything from your interest rate to your loan terms, so it’s critical to understand what your score is, and where it comes from!