FICO Credit Score — The Number That Controls Your Financial Life
FICO scores decide whether you get credit and what it costs. How the 300-850 scale works, the five inputs, and what actually moves your number.
FICO Credit Score
Your FICO score is a three-digit number between 300 and 850, and it decides two things: whether a lender will approve you, and what rate they will charge. It is the most consequential number in your financial life that you have probably looked at once.
It is not a measure of wealth, income, or character. It is a prediction of one specific behaviour — how likely you are to become ninety days late on a debt within the next two years.
Where the number comes from
FICO is a company, not a government agency. Fair Isaac Corporation sells a scoring model, and that model reads the data in your credit file. The file is maintained by three separate bureaus — Equifax, Experian, and TransUnion — and they do not share information with each other. A lender reports your account to one, two, or all three, which is why your score is rarely the same everywhere.
The bands, and what they buy you
The bands are published. What matters is not the label but the price attached to it.
| Score | Rating | What it usually gets you |
|---|---|---|
| 800–850 | Exceptional | Best advertised rates, instant approvals |
| 740–799 | Very good | Near-best rates, most approvals |
| 670–739 | Good | Average rates, generally approved |
| 580–669 | Fair | Higher rates, deposits often required |
| 300–579 | Poor | Denied by most lenders, or subprime pricing |
Most lenders treat 740 as the point where pricing stops improving much. That makes 740 a more useful target than 850 — the last hundred points buy you very little.
What actually moves it
FICO publishes the five categories and their weights. The formula itself is proprietary, but the weights tell you where the leverage is.
FICO's published scoring categories. The exact algorithm is proprietary.
Two things follow that are worth internalising. First, 65% of your score comes from paying on time and keeping balances low — both entirely within your control. Second, nothing about your income, savings, or employment appears anywhere in that list. Earning more does not raise your score.
The cost of getting it wrong
The reason to care is not the number. It is what the number costs.
The same house and the same thirty years. The gap between the top band and the bottom is roughly $99,000.
Illustrative, based on typical published rate spreads between FICO bands.
A single 30-day late payment can cost 60 to 110 points if the rest of your file is strong, and it stays on your report for seven years. On a mortgage application that is not an abstraction — it can move you into the next pricing band.
What to do, in order
Pull all three reports and dispute errors
Free at AnnualCreditReport.com. Errors are common, and correcting one is the cheapest points available.
Bring every account current
Nothing else you do outweighs an active delinquency. If you are behind, catching up is the whole job.
Pay cards before the statement closes
Balances are usually reported on the statement date, not the due date. Paying early is what produces a low reported balance.
Get utilisation under 10% if you can
Utilisation has no memory, so it responds within one or two billing cycles.
Leave old cards open
Closing a card removes its limit from the calculation and shortens your reported history.
Space out new applications
Inquiries fade in about a year. Mortgage and auto inquiries inside a short window count as one.
The myths worth dropping
| Myth | Reality |
|---|---|
| Checking your own score lowers it | Self-checks are soft inquiries and are never scored |
| Carrying a balance builds credit | It only costs you interest. Paying in full builds the same history |
| Closing cards raises your score | It usually lowers it, by cutting your available credit |
| Income affects your score | Income is not in the model at all |
| Debit card use builds credit | Debit activity is not reported to the bureaus |
| You need to pay for your score | You are entitled to a free report from each bureau every week |
How to see it for free
You do not need a subscription. Federal law entitles you to a free report from each of the three bureaus, and many banks and card issuers now show a FICO score in their app at no cost. Those free scores are genuine FICO readings, though usually from one bureau and one model version.
What you cannot get for free is a guarantee that all three files agree. Once a year, pull all three and read them. The most expensive errors — an account that is not yours, a payment wrongly marked late, a debt that should have aged off — only show up that way.
Your score is a prediction about the past repeating. The fastest way to improve the prediction is to make the recent past boring: on time, low balances, no new applications. Time does the rest.
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