What is a FICO score and how is it different from a credit score?

What is a FICO score and how is it different from a credit score?

FICO score is a three-digit number, in the range of 300-850 range, that tells lenders whether you are potentially good with returning the credit that you borrow.

When you apply for new lines of credit, the potential creditor will use your FICO score to make a decision of whether your loan/ line of credit should be approved. If it approved, then for what amount, duration and interest rate? Great credit repayment behaviour, a good credit mix and history are some of the reasons potential creditors feel comfortable giving credit on.What is a FICO score?FICO scores are a kind of credit score. FICO is an anagram for Fair Isaac Corp., which introduced the FICO score in 1989. While most of us use credit score and FICO synonymously, FICO is only a type of credit score.What is the FICO score range?Majorly, a FICO score falls within the range of 300 to 850 and a higher score indicates better credit worthiness.

In addition to these, FICO also has industry-specific scores such as those for credit cards and car loans, which range from 250 to 900.

How is this score calculated?

There are typically 3 bureaus that generate credit reports: Equifax, Experian and TransUnion. The way your score is calculated at each is slightly different from the other.

Scores from 690 to 719 are considered good credit scores. However, each lender has individual parameters by which they qualify you for a line of credit.

So, is there anything that affects your FICO score?

While there's no formula set in stone when it comes to your FICO score, here's a tentative breakdown of how your credit behaviour might be affecting the score.


There's no one right way to build a credit score. But there are multiple ways you can ensure that your credit score isn't stagnant or falling.

  • Pay up on time and in full: Ensure that you're not keeping credit lines open for too long. If you're borrowing funds, ensure that you also have a means to repay them.
  • Don't shoot way beyond your affordability: You might have an excellent credit score. But that doesn't give you the license to go and buy the whole town. Can you really afford to utilize the credit being given to you? Think about it before jumping the gun.
  • You're constantly being sold credit: Credit companies need you to take out new lines of credit and they will do anything to make that look lucrative. But do you really need that? If you don't need a loan, just don't take it. Simple.

Whether you are looking to increase your FICO score, or take on a new line of credit, ensure that you have a game plan in mind.