How FICO Scores Work

The FICO score is calculated by a mathematical equation that evaluates many types of information from your credit report at that agency. By comparing this information to the patterns in hundreds of thousands of past credit reports, the FICO score identifies your level of future credit risk. In order for a FICO score to be calculated on your credit report, the report must contain enough information-and enough recent information-on which to base a score. Generally, that means you must have at least one account that has been open for six months or longer, and at least one account that has been reported to the credit reporting agency within the last six months.


Credit scores are often called "FICO scores" because most credit scores used in the US and Canada are produced from software developed by Fair Isaac Corporation (FICO). FICO scores are provided to lenders by the three major credit reporting agencies:

Equifax, Experian and TransUnion.

FICO scores provide the best guide to future risk based solely on credit report data. The higher the score, the lower the risk. But no score says whether a specific individual will be a "good" or "bad" customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single "cutoff score" used by all lenders.


In general, when people talk about "your score;' they're talking about your current FICO score. But in fact there are three different FICO scores developed by Fair Isaac, one at each of the three main US credit reporting agencies. And these scores have different names.

The FICO scores from all three credit reporting agencies are widely used by lenders. The FICO score from each credit reporting agency considers only the data in your credit report at that agency. Fair Isaac develops all three FICO scores using the same methods and rigorous testing. These FICO scores provide the most accurate picture of credit risk possible using credit report data.


FICO scores range from 300 to 850. Fair Isaac makes the scores as consistent as possible between the three credit reporting agencies. If your information was exactly identical at all three credit reporting agencies, your scores might still differ because the models for the three credit reporting agencies are developed separately. However, all three scores would be within a few points of each other.

Some people will find that their scores at the different bureaus will vary by more than a few points. The differences in scores can be caused by a couple of different factors:

  1. The way lenders and other businesses report information to the credit reporting agencies sometimes results in different information being in your credit report at the three agencies.
  2. The agencies may also record the same information in different ways. Even small differences in the information at the three credit reporting agencies can affect your scores.

Since lenders may review your score and credit report from any of the three credit reporting agencies, it's a good idea to check your credit report from all three and make sure they're all accurate.