FICO Score 8 is a credit scoring model from the Fair Isaac Corporation (FICO) that is widely used by lenders to help determine the creditworthiness of potential borrowers and what interest rate they should be charged. This version of the company's base credit-scoring model was released in 2009. Show Definition and Examples of the FICO Score 8FICO Score 8 is one of many formulas created by the Fair Isaac Corporation (FICO) to produce a credit score for individual consumers. Lenders and creditors will decide whether to loan you money or offer lines of credit and charge interest rates based on a number of factors, but the FICO Score 8 is widely viewed as a reputable source of credit assessment. Even though it was released by FICO more than a decade ago, Score 8 is the version utilized most often by all three of the major credit reporting companies: Equifax, Experian, and TransUnion. These for-profit companies, which are also referred to as "credit bureaus," compile credit reports on borrowers, and each one offers its own FICO credit scores based on the credit information it has available. Lenders look at a potential borrower's credit reports and credit scores to make decisions about mortgage, car loan, and credit card applications. NoteFICO Score 8 is a base score, which means that it is used to consider the risk of a borrower not making payments on any type of loan. Other types of FICO Score are used for a specific type of borrowing, such as an auto loan. The FICO Score 8 model changed from the previous version in several key ways:
How Does FICO Score 8 Work?FICO doesn't reveal its exact methodology for determining credit scores. However, as with the previous version, FICO has said it gives the following percentage weights to the five credit criteria it uses in its Score 8 model.
Scores range from 300 to 850, with higher scores being better. A score of 800 or more is considered to be exceptional. One from 740 to 799 is very good. One from 670 to 739 is good. One from 580 to 669 is fair. And a score of 579 or less is poor. FICO and all three of the credit reporting companies can provide you with your FICO Score 8, though it's typically offered as part of a credit monitoring and reporting and/or identity theft protection service with a monthly charge. NoteYour credit card company or other lender may provide you with a credit score for free. Alternatives to FICO Score 8FICO Score 9 is a newer version of FICO's base scoring model. Lenders may also use a competing scoring model called VantageScore. FICO released FICO Score 9 in August 2014. There are two big changes from Score 8: Model 9 ignores collection agency accounts that have been paid off and penalizes consumers less for unpaid medical collection agency accounts. NoteA Consumer Financial Protection Bureau. "CFPB Study Finds Medical Debt Overly Penalizes Consumer Credit Scores." Accessed Dec. 8, 2021. Most updates to FICO’s base score are adjustments in the calculations used for each of these categories. When the company makes such adjustments, it releases new versions to the lending marketplace. Is 8 or 9 FICO score better?FICO 9 is similar to FICO 8 but differs when it comes to collections and rent payments. FICO 9 counts medical collections less harshly than other accounts in collections, so a surgery bill in collections will have less of an impact on your credit score than a credit card bill in collections.
What is a FICO score 8 system?Definition. FICO Score 8 is a credit scoring model from the Fair Isaac Corporation (FICO) that is widely used by lenders to help determine the creditworthiness of potential borrowers and what interest rate they should be charged. This version of the company's base credit-scoring model was released in 2009.
Is a FICO 8 score the same as a credit score?FICO scores are one type of credit score (VantageScore being another), but you can also have multiple versions of a FICO score. FICO 8, introduced in 2009, is the most widely used, while FICO 9 as well as FICO 10 and FICO 10T are newer versions.
Is FICO 8 usually higher than FICO 2?Re: credit score fico 2 much lower than fico 8
This isn't a discrepancy. Those two scores aren't attempting to measure the same risk. There are numerous FICO score models, some of which specialize in predicting the risk of default for a specific type of credit (a mortgage, a credit card, an auto loan).
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