How do lenders use FICO® Scores, and how do these scores help you?
At a Glance: FICO® Scores are widely used by lenders to assess credit risk, helping streamline and standardize the credit approval process for loans, credit cards, and mortgages. Different FICO® Score versions cater to specific lending needs, supporting more consistent and objective credit assessments that can broaden access to credit for more consumers.
90% of top U.S. lenders use FICO® Scores.
When you apply for credit — whether it's for a credit card, car loan, mortgage, or other type of credit — lenders will want to know your credit risk. That is, they'll want to do a credit check to know how likely you are to pay back your credit obligations as agreed. To help them understand your credit risk, lenders use FICO® Scores.
FICO® Scores help lenders quickly, consistently, and objectively evaluate potential borrowers' credit risk. So, when you apply for credit or a loan, there's a very good chance your lender will use your FICO Scores to help them decide whether to approve you, and what terms and rates you qualify for.
Understanding different FICO® Score versions
You have more than one FICO® Score — depending on what type of credit you're seeking, your lenders may evaluate your credit risk using different FICO Score versions.
Common FICO® Score versions by credit type
- Auto loans:
- Often use FICO® Auto Scores (industry-specific versions designed for auto lenders).
- Credit cards:
- Commonly use FICO® Bankcard Scores
- May also use FICO® Score 8 or FICO® Score 9
How many FICO® Scores do lenders pull when you apply?
The number of FICO® Scores a lender pulls — and from how many credit bureaus — depends on the type of credit you’re applying for. FICO Scores are calculated using data from the three major credit bureaus (Equifax, TransUnion, and Experian), but not every application requires a score from all three.
- Credit cards and most general credit applications:
- For most credit evaluations, lenders typically use a single FICO® Score pulled from one of the three major credit bureaus to evaluate your credit risk.
- Mortgages and home equity loans:
- When you apply for a mortgage or home equity loan, lenders typically pull a FICO® Score from each of the three major credit bureaus to get a comprehensive view of your credit worthiness.
Learn more about the different FICO® Score versions lenders use when evaluating your credit risk.
How credit scoring can benefit everyone
Credit scores give lenders a fast, objective measurement of your credit risk.
Credit scores — especially FICO® Scores, the credit scores used by 90% of top US lenders — have made big improvements in the credit process. Because of credit scores:
- People can get loans faster.
Scores can be delivered almost instantaneously, helping lenders speed up loan approvals. Today many credit decisions can be made within minutes. Even a mortgage application can be approved in hours instead of weeks for borrowers who score above a lender's "score cutoff". Scoring also allows retail stores, Internet sites, and other lenders to make "instant credit" decisions. - Credit decisions are fairer.
Using credit scoring, lenders can focus only on the facts related to credit risk, rather than their personal feelings. Factors like your gender, race, religion, nationality, and marital status are not considered by credit scoring. - Credit "mistakes" count for less.
If you have had poor credit performance in the past, credit scoring doesn't let that haunt you forever. Past credit problems fade as time passes, and as good payment patterns show up in your credit report. Unlike the so-called "knock out rules" that turn down borrowers based solely on a past problem in their file, credit scoring weighs all the credit-related information, both good and bad, in your credit report. - More credit is available.
Lenders who use credit scoring can approve more loans, because credit scoring gives them more precise information on which to base credit decisions. It allows lenders to identify individuals who are likely to perform well in the future, even though their credit report shows past problems. Even people whose scores are lower than a lender's cutoff for "automatic approval" benefit from scoring. Many lenders offer variations of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan. The use of credit scores gives lenders the confidence to offer credit to more people, since they have a better understanding of the risk they are taking on. - Credit rates are lower overall.
With more credit available, the cost of credit for borrowers decreases. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders, who in turn have passed savings on to their customers. And by controlling credit losses using scoring, lenders can make rates lower overall.
FICO® Scores can help shape your credit opportunities
FICO® Scores can play a pivotal role in the credit process, benefiting both lenders and borrowers alike. By providing a fast, fair, and objective measure of credit risk, these scores streamline loan approvals, ensure equitable credit decisions, and make credit more accessible to a wider range of individuals. Whether you're applying for a credit card, car loan, or mortgage, understanding how FICO Scores work and how they are used by lenders can empower you to take control of your financial future.
FAQs: FICO® Scores
Which credit scoring models are most commonly used by lenders?
FICO® Scores are utilized by 90% of top U.S. lenders. While base FICO® Score versions like FICO® Score 8 and FICO® Score 9 are common, lenders also use industry-specific versions tailored to different types of credit, such as auto loans or credit cards.
How do lenders use your credit score when evaluating a credit card application?
When you apply for a credit card, issuers typically use your FICO® Score as a primary factor to quickly gauge your credit risk. Most card issuers will pull a score from one of the three major credit bureaus, using a version like FICO® Bankcard Score 8. Your score helps the issuer decide not just on approval, but also on the credit limit and interest rate you're offered. A higher score generally signals lower risk, which can translate to better terms.
Which FICO® Score factors matter most for auto loan approval?
When evaluating auto loan applications, lenders often use FICO® Auto Scores — industry-specific versions designed to better predict auto loan performance. These scores consider the same core factors as base FICO Scores, including payment history, amounts owed, length of credit history, new credit, and credit mix, but are fine-tuned based on auto-lending-specific risk behaviors.