A FICO score is a three-digit number that lenders use to decide whether to lend you money and at what interest rate
Your FICO score ranges from 300 to 850. The higher the number, the lower the risk you appear to lenders. A score of 670 or above is generally considered good; 740 or above is very good. Lenders pull your FICO score when you explore for a mortgage, car loan, credit card, or personal loan. They use it to decide in seconds whether to approve you, deny you, or offer you a higher or lower interest rate than someone else.
FICO stands for Fair Isaac and Company, the company that created the scoring model in 1989. It remains the most widely used credit score in the United States. When a lender says "we checked your credit," they are almost always checking your FICO score, not some other number.
Your score changes every month based on new information in your credit report. You have three separate FICO scores—one from each of the three major credit bureaus (Equifax, Experian, and TransUnion)—because each bureau holds slightly different information about you. Lenders may check one, two, or all three.
Key Takeaways
- FICO scores range from 300 to 850, and lenders use them to decide whether to lend you money and at what interest rate.
- Five factors make up your FICO score: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%).
- You have three FICO scores—one from each credit bureau—and they may differ because each bureau has different information about you.
- You can view your FICO scores for free once per year from each bureau at annualcreditreport.com, or pay for monthly monitoring through FICO's own website.
The five factors that make up your FICO score
Payment history (35% of your score) is the single largest factor. This is whether you pay your bills on time. One late payment can drop your score by 100 points or more. Missed payments stay on your report for seven years, though their impact fades over time.
Amounts owed (30% of your score) is how much of your available credit you are using. If you have a credit card with a $5,000 limit and a $4,500 balance, your utilization is 90%—high and damaging. Lenders prefer to see utilization below 30%. This factor includes both credit cards and installment loans like car loans.
Length of credit history (15% of your score) rewards you for having accounts open for a long time. Closing old accounts can hurt this factor. The oldest account on your report matters, and so does the average age of all your accounts.
Credit mix (10% of your score) means having different types of credit: credit cards, car loans, mortgages, and personal loans. Lenders see this as a sign you can manage different kinds of debt. You do not need to take out loans you do not need to improve this factor.
New credit inquiries (10% of your score) tracks how many times you have recently applied for new credit. Each process triggers a hard inquiry, which can lower your score by a few points. Multiple inquiries within 14 days for the same type of loan (like car shopping) usually count as one inquiry.
How to check your FICO score for free
You are may have access to to one free credit report per year from each of the three bureaus at annualcreditreport.com. This is the only official site authorized by the federal government. However, a free credit report does not include your FICO score—it shows only the raw information the bureaus have about you.
To see your actual FICO score for free, you have two main options. First, some credit card companies and banks show your FICO score free to their customers in your online account or mobile app. Check with your bank or card issuer. Second, you can visit myfico.com, the official FICO website, and purchase your scores. Prices vary, but a single score typically costs a few dollars, and monthly monitoring subscriptions are available.
Many free credit monitoring websites offer a "free score," but these are usually VantageScore (a competitor to FICO) or educational scores, not your actual FICO score. They can be useful for tracking trends, but lenders use FICO, so that is the number that matters for loans and interest rates.
Why your FICO score matters for borrowing
Your FICO score directly affects whether you can borrow money and how much it will cost. A person with a 750 FICO score might may have access to for a mortgage at 6.5% interest, while a person with a 620 score might only may have access to at 8.5% interest. Over a 30-year loan, that difference costs tens of thousands of dollars in extra interest.
Lenders also use FICO scores to set credit limits. A high score gets you a higher limit and better terms. A low score may result in a denial or a very low limit. Some landlords and employers also check credit scores, though they may use a different scoring model.
Your FICO score is not permanent. It changes every month as new information is reported to the credit bureaus. Paying bills on time, lowering credit card balances, and avoiding new hard inquiries will improve your score over time.
The difference between hard and soft inquiries
When you explore for credit, the lender performs a hard inquiry (also called a hard pull). This appears on your credit report and can lower your FICO score by a few points. Hard inquiries stay on your report for two years but stop affecting your score after about 12 months. Multiple hard inquiries for the same type of credit within 14 to 45 days usually count as one inquiry.
A soft inquiry (soft pull) happens when you check your own credit, when a company pre-screens you for an offer, or when an employer checks your credit. Soft inquiries do not appear on your credit report and do not affect your FICO score at all. You can check your own credit as many times as you want without any impact.
Common misconceptions about FICO scores
One myth is that checking your own credit hurts your score. It does not. Only hard inquiries from lenders affect your score. Another myth is that you need to carry a balance on a credit card to build credit. You do not—paying off your balance in full each month is better for your score and saves you interest.
Some people believe that closing old credit cards will improve their score. The opposite is true. Closing an account lowers your available credit and shortens your average account age, both of which hurt your score. Keeping old accounts open (even unused) is better.
Finally, many people think their FICO score is the same everywhere. It is not. Each bureau may have different information, so your Equifax score may differ from your Experian score. Lenders may check one or all three, so it is worth monitoring all three scores if you are about to explore for a major loan.
Frequently Asked Questions
What FICO score do I need to get a mortgage?
Most conventional mortgages require a FICO score of at least 620, though 740 or above gets you the best interest rates. FHA loans may accept scores as low as 580. The exact requirement depends on the lender, the size of your down payment, and current market conditions. Contact lenders directly to learn their specific requirements.
How long does it take to improve a FICO score?
Small improvements can happen within weeks if you pay down credit card balances or catch up on late payments. Major improvements typically take months to a year or more, especially if you have recent negative marks like missed payments or collections. The older the negative information, the less it affects your score.
Does my FICO score affect my insurance rates?
Some insurance companies use credit information to set rates, though they do not use your FICO score directly. Instead, they use a credit-based insurance score, which is similar but calculated differently. Paying bills on time helps both scores. Check with your insurance company about their specific policy.
Can I have a FICO score if I have never borrowed money?
No. You need at least one account reported to the credit bureaus to have a FICO score. This could be a credit card, car loan, mortgage, or other type of credit. If you have no credit history, you may need to start with a secured credit card or become an authorized user on someone else's account.
What should I do if my FICO score is very low?
Start by getting a copy of your credit report from annualcreditreport.com and checking for errors. Dispute any inaccuracies with the bureau. Then focus on paying all bills on time going forward and paying down credit card balances. These two actions alone will improve your score over time, though it may take several months to see significant movement.