FICO Score

Definition

A FICO Score is the most widely used credit scoring model in the United States, developed by Fair Isaac Corporation. It ranges from 300 to 850 and is based on your payment history, credit utilization, length of credit history, credit mix, and recent inquiries. When a lender says they checked your credit, they usually pulled your FICO Score. You have three FICO Scores (one from each credit bureau), and lenders typically use the middle one.

Why it matters

FICO Scores directly determine your access to credit and its cost. A score above 760 gets you the best mortgage rates. A score below 620 makes borrowing expensive or impossible. Even small moves matter: improving from 700 to 750 can lower a mortgage rate by 0.25%, saving tens of thousands. Your FICO determines not just approval but the actual terms. Building your FICO is one of the highest-return financial moves you can make because of how much interest rates respond to score improvements.

Quick example

Two borrowers each want to borrow $250,000 for a mortgage. Borrower A has a 780 FICO Score and gets approved at 6.1%. Borrower B has a 680 FICO Score and gets approved at 7.3%. Over 30 years, Borrower A pays about $450,000 total interest while Borrower B pays about $620,000. The 100-point FICO difference demonstrates why maintaining good credit costs Borrower B nearly $170,000.

The bottom line

Knowing what FICO Score means helps you make better day-to-day money decisions. It makes rates, account options, and tradeoffs easier to compare.