Credit Score Optimization (FICO)
A 760 FICO score and a 640 are both good enough to buy a house. One of them costs about $177,000 more in interest on a $300,000 mortgage. The five factors with their real weights, how the three bureaus differ, and the order that actually repairs a damaged file.
Credit Score Optimization (FICO)
A 760 FICO score and a 640 are both "good enough to buy a house." One of them costs about $177,000 more in interest on a $300,000 thirty-year mortgage. Same house, same term, same borrower income. The only difference is a three-digit number that most people check once a year at most.
What the score actually is
FICO stands for Fair Isaac Corporation. The company does not lend money and does not collect it. It takes the data in your credit file and turns it into a number between 300 and 850 that estimates how likely you are to pay a bill ninety days late. Lenders use that estimate to price risk, which means the score does not decide whether you can borrow. It decides what borrowing costs you.
The bands are published, and so is the distribution.
| Score | Rating | What it usually gets you |
|---|---|---|
| 800-850 | Exceptional | The best advertised rates |
| 740-799 | Very good | Near-best rates, easy approvals |
| 670-739 | Good | Average rates, most approvals |
| 580-669 | Fair | Higher rates, deposits required |
| 300-579 | Poor | Denied or subprime pricing |
The median FICO score in the US sits around 715. That is the middle of the country, not a target. If you are at 715 you are average, and average borrowers pay more for every loan they take than the 23% of people in the 800-850 band.
The remaining 36% of adults have no score at all, usually because they have had no credit activity in the last six months.
FICO published score distribution. Bands are the ones FICO reports.
Where the number comes from
Three bureaus hold your file: Equifax, Experian and TransUnion. They are competitors, they buy data from the same lenders, and they frequently disagree. A late payment reported by one lender may appear at two bureaus and not the third. When people say they have three credit scores, that is why.
FICO then runs a scoring model over whichever file it is given. There are many versions. FICO Score 8 is the one most widely sold to lenders, FICO Score 9 and 10 are newer, and the auto and bankcard industries get their own model variants on a different 250-900 scale. A credit card app showing you a score is showing you one model, and a mortgage lender will pull another. Treat the number you see as a good estimate, not a verdict.
The five factors, with their real weights
FICO publishes how much each category matters. The percentages are relative importance rather than a formula you can reproduce, because the weights shift with the length of your file.
| Factor | Weight | What moves it |
|---|---|---|
| Payment history | 35% | Any payment 30 or more days late, plus bankruptcies and collections |
| Amounts owed | 30% | Balances against limits, especially on credit cards |
| Length of history | 15% | Age of your oldest account and the average age of all accounts |
| New credit | 10% | Hard inquiries and accounts opened in the last year |
| Credit mix | 10% | A card-only file against a file with an installment loan |
Payment history and amounts owed are 65% of the score, and both are things you control this month. Credit mix is the one people obsess over and should not: taking on a loan to improve your mix is paying interest to move 10% of a formula you cannot see.
A single missed payment hurts more than most people expect. Pay a card thirty days late and a score in the 780s can fall past 100 points, and the entry stays on the report for seven years. Its weight fades as the file ages, but it is not gone. This is the part of credit scoring that is genuinely unforgiving, and it is why autopay for at least the minimum on every account is not optional.
Utilisation is the other lever, and it is faster. Balances are usually reported to the bureaus on your statement date, not your due date, so a card you pay in full can still report as maxed out. Under 30% of your limit on every card is the working rule; under 10% is where the best scores live.
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