FICO scores are your credit rating, they range from 300-850, higher is better. Most lenders base approval on them and Higher scores mean lower interest rate.

myFICO is the consumer division of Fair Isaac, the company that invented the FICO credit risk score that lenders use. Starting in the 1960s, Fair Isaac sparked a revolution by pioneering credit risk scoring for the financial services industry. This new approach to lending enabled financial institutions to improve their business performance and expand consumers’ access to credit. Today Fair Isaac’s FICO score is widely recognized as the industry standard for lenders.

myFICO® offers informative credit-information products that help people understand actions they can take to achieve and protect their overall financial health.

myFICO® is allied with national credit reporting agencies Equifax, TransUnion and Experian to create a new generation of credit information products that empower consumers to understand and protect their true credit standing.

Fair Isaac is publicly traded on the New York Stock Exchange under its symbol FIC.

FICO is the acronym for the Fair Isaac Corporation, the private corporation creating the best known and most widely used credit score model in the United States. The FICO Score is calculated statistically, with information from a borrower's credit files. The FICO score is primarily used in consumer banking and in the credit business. Banks and other institutions using such scores as a factor in their lending decisions may deny credit, charge higher interest rates, or require extensive income and asset verification if the applicant's FICO credit score is low.

FICO scores are intended to show the likelihood that a borrower will default on a loan; a separate score, the BNI, is used to determine the likelihood of a borrower's declaring bankruptcy.

Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are closely guarded secrets, the Fair Isaac Corporation has disclosed the following components and the approximate weighted contribution of each:

• 35% — punctuality of payment in the past includes payments later than 30 days past due)
• 30% — the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
• 15% — length of credit history
• 10% — types of credit used (installment, revolving, consumer finance)
• 10% — recent search for credit and/or amount of credit obtained recently

The above percentages provide very limited guidance in understanding a credit score. For example, the 10% of the score allocated to "types of credit used" is undefined, leaving consumers unaware what type of credit mix to pursue. "Length of credit history" is also a murky concept; it consists of multiple factors — two being the oldest account open and the average length of time an account has been open. Although only 35% is attributed to punctuality, if a consumer is substantially late on numerous accounts, his score will fall far more than 35%. Bankruptcies, foreclosures, and judgments affect scores substantially, but are not included in the somewhat simplistic pie chart provided by Fair Isaac.

Current income and employment history do not influence the FICO score, but they are weighed when applying for credit. For instance, an unemployed individual with no other sources of income will not usually be approved for a home mortgage, regardless of his or her FICO score.

There are other special factors which can weigh on the FICO score.

• Any monies owed because of a court judgment, tax lien, or similar carry an additional negative penalty, especially when recent.
• Having more than a certain number of consumer finance credit accounts also carries a negative weight (critics say that this causes a vicious cycle, locking people into continuing to use consumer finance companies).
• The number of recent credit checks also can weigh down the score, although credit agencies usually claim to allow for credit checks made within a certain window of time not to aggregate, so as to allow the consumer to shop around for rates.

Although the Fair Isaac Corp.'s web site offers to sell borrowers their FICO Score, that company uses different scoring methods to rate a borrower's suitability for three types of credit—mortgages, automobile loans, and consumer credit— reflecting the loan default risks inherent to these different types of money lending. It is not unusual for these scores to differ—by 50 points or more—for the same borrower; (the score offered to borrowers is their consumer credit score).

Get All 3 FICO Scores and Credit Reports!