Credit Management Magazine Section

What is a FICO® score?


FICO® Score stands for 'Fair Isaac Company Score' is a credit-score* between 300 and 850® (FICO® Scores range: 300-850®). The score, as indicated by its name, was developed by the Fair Isaac Company (now FICO) a data analytics company based in San Jose, California and is now used by creditors (lenders) to determine the credit risk of a borrower. A high score is a favourable score for consumer. It could translate into not just a quick approval of a loan but also into a lower rate. 

Most of the financial institutions in North America use this as a standard for benchmarking consumer risk, for granting or qualifying home loans, car loans and credit cards. Millions of lending decisions are made on a FICO® Score each year. The score is percentile based and depending upon how the rest of the country fairs, a score of 765 may be deemed as average. The higher the score the better it is for a consumer.

Both Equifax and FICO provides consumers access to their FICO® credit score. Normally a credit bureau credit report contains 'ratings' and not a 'credit-score'*. Therefore, in order to check your FICO® Score you will have to order a separate report from Equifax called 'Score Power'. The cost of an ordinary credit report is around $15 and a 'Score Power-Credit Score Report' costs about $22.

Some Key Factors Influencing your FICO® Score.

•FICO® Score is tabulated by reviewing the credit file with the local credit bureau like Equifax. Your payment history is very important and receives the maximum weightage and could be as high as 35-40% of the total weightage

•A high balance owed on your non-mortgage accounts will drop your score. A high balance owed on a credit card means increased risk of re-payment in future. Accelerated payments of debts and maintaining low balances on credit cards will help to improve your *credit-score. The weightage for this could be anywhere between 30%-35% of the total weightage.

•To raise your FICO® Score apply for credit only if required. Research has indicated that consumers actively seeking credit are in a higher risk category. Too many credit inquiries posted on your credit bureau file in the past 12 months is not a good practice.

•Research also indicates that consumers with longer credit histories have better repayment risk than those with shorter credit histories. Credit histories are built by having a revolving (non-mortgage) account like VISA or MasterCard. Maintaining low-to-moderate balances on your credit cards making your payments on time gives you a good score. The score should improve as the revolving credit history ages.

•Loans from finance companies instead of the regular bank channel could generally lower your credit score. FICO® deems this important especially when there isn't a lot of other information upon which they can base a score.

* Credit Score is an indicator of the risk level that a borrower might represent. It is a predictive score and it is used to determine the probability of future payment performance.

After considering a number of risk variables a credit-score is a numeric value arrived at by a decision support model. It is a number assigned by credit grantors to indicate the likelihood of repayment of a loan or credit card in accordance with the agreed terms of payment. 


Equifax USA
P.O. Box 105873
Atlanta, GA. 30348

(800) 685-1111 or (770) 612-3200
For Georgia, Vermont or Massachusetts (800) 548-4548
For Maryland, (800) 233-7654

Web site address:

 Equifax CANADA

Equifax Canada Inc.
Consumer Relations Department 
Box 190 Jean Talon Station 
Montreal, Quebec H1S 2Z2

Web site:

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 Fair Isaac USA 

901 Marquette Avenue, Suite 3200
Minneapolis, MN 55402 USA

TEL: +1 (612) 758 5200
Web site:
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 Fair Isaac CANADA

 The Exchange Tower
130 King Street West, Suite 1800 
Toronto, Ontario, M5X 1E3, Canada

TEL: +1 (416) 865 3390 | FAX: +1 (416) 865 3379
Web site: 
EMAIL: This email address is being protected from spambots. You need JavaScript enabled to view it. 


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