What is a Credit Score?

A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.

Credit scores influence the credit that's available to a person and the terms (interest rate, etc.) that lenders may offer. It's a vital part of credit health.

When you apply for credit — whether for a credit card, an auto loan or a mortgage—lenders want to know what risk they'd take by loaning money. When lenders order a credit report, they can also request a credit score that's based on the information in the report. A credit score helps lenders evaluate a credit report. It is a number that summarizes credit risk, based on a snapshot of a credit report at a particular point in time.

It's important to understand that not every credit score offered for sale online is a FICO Score. Learn the difference between credit scores and FICO Scores.

About FICO Scores
The most widely used credit scores are FICO Scores, the credit scores created by Fair Isaac Corporation. 90% of top lenders use FICO Scores to help them make billions of credit-related decisions every year. FICO Scores are calculated based only on information in a consumer's credit report maintained by the credit bureaus, Experian, Equifax and TransUnion.
By comparing this information to the patterns in hundreds of thousands of past credit reports, FICO Scores estimate your level of future credit risk, or how likely you are to repay a loan on time.

What is a good credit score?

Most credit scores have a 300-850 score range. The higher the score, the lower the risk to lenders. A "good" credit score is considered to be in the 670-739 score range.

Credit Score Ranges Rating Description
<580 Poor This credit score is well below the average score of U.S. consumers and demonstrates to lenders that the borrower may be a risk.
580-669 Fair This credit score is below the average score of U.S. consumers, though many lenders will approve loans with this score.
670-739 Good This credit score is near or slightly above the average of U.S. consumers and most lenders consider this a good score.
740-799 Very Good This credit score is above the average of U.S. consumers and demonstrates to lenders that the borrower is very dependable.
800+ Exceptional This credit score is well above the average score of U.S. consumers and clearly demonstrates to lenders that the borrower is an exceptionally low risk.

While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates. Learn how to improve your FICO Score.

Why is my credit score high or low?

When a credit score is calculated, the credit bureau will also provide up to five reasons that are most heavily influencing that particular score. These reasons are usually negative because they are the reasons why the credit score isn't higher. Learn what's in your credit scores.

The minimum required to calculate a credit score

For a credit score to be calculated, your credit report must contain enough information—and enough recent information—on which to base a credit 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 bureau within the last six months. What are the minimum requirements to have a FICO Score?

Different scores at each credit bureau

Because each credit bureau could have different information on file about you, your credit scores will most likely differ for each of the three credit bureaus: Equifax, TransUnion and Experian.

Sometimes the difference is just a few points. Other times, the difference in your credit scores from each bureau can be vast due to an error or mistake in your credit report. These differences can cost you thousands over the life of a loan. Be sure to check your reports regularly or sign up for alerts to be notified when your score changes.

Your credit scores will change over time

As the information in your credit report changes, so will any new credit score based on your credit report. Your credit scores from a month ago are probably not the same score a lender would get from the credit bureau today. See how much FICO Scores change over time.

Other credit scores or FICO Scores?

While FICO Scores are used by 90% of top lenders, there are other credit scores made available to consumers. Other credit scores may evaluate your credit report differently than FICO Scores. When purchasing a credit score for yourself, most experts recommend getting a FICO Score, as FICO Scores are used in 90% of lending decisions.


See how lenders use FICO Scores:

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