FICO Score 8 – An Exclusive Review
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FICO Score 8 – An Exclusive Review
There are many versions of the FICO score, although none of them is as widely used as the FICO score 8 models. With a few updates made to the previous version, this FICO scores 8 models is commonly used by lenders to assess and determine the borrower’s risk. If you are wondering what FICO score 8 is, read until the end to learn every essential detail you need to know about FICO scores.
I am Damon DeCrescenzo, Founder of The Credit Pros. With years of experience as a credit advisor, I am here to answer all your questions about FICO Score 8.
So, let’s start with this detailed analysis of FICO score 8, how it affects your credit score, and what criteria FICO score uses to weigh your credit score.
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What Is FICO Score 8?
The FICO score 8 model is one of the methods of FICO scoring and is also one of the older versions. The FICO score is a credit score method created by the Fair Isaac Corporation (FICO). Even though it is not the newest version of the FICO scoring methods, the FICO score 8 is majorly used by lenders to determine the creditworthiness of the borrowers with the credit report details to assess the credit risk, and make decisions on things, like how much interest should be charged and whether to extend the credit or not.
The FICO score determines the creditworthiness of a borrower by taking into consideration these five criteria: payment history, current debt level, used types of credit, credit history length, and new accounts of credit.
The scale of FICO scores created generally is 300 to 850. The score is totally based on the details from your credit report. The terms and interest rates are usually better on your credit if your credit score is high.
FICO Score 8 Ranges
|Less than 579||Poor|
|580 – 669||Fair|
|670 – 739||Good|
|740 – 799||Very Good|
|800 or more||Exceptional|
Is FICO Score 8 and Credit Score the Same?
The credit score is a type of FICO score model, so there is not much difference between the credit score, and FICO score 8 which is one of the scoring methods of FICO. The factors weighed are slightly different with various reporting agencies, but the factors that are measured are almost the same.
Is FICO Score 8 Widely Used?
You can say that the FICO score 8 is one of the most widely and commonly used FICO scores. Although there are other models and versions of the credit scoring methods the creditors can choose to use. So, when you are in need of a loan or new credit card, for example, the score the creditor is going to use for evaluating your application is the one that matters the most.
What Are the Differences between FICO Score 8 and Previous FICO Score Versions?
As we already know, FICO score 8 is the most commonly used method among the FICO score models. FICO score 8 just has some updates added to the previous versions. Other than that, there are some criteria that are taken into account, just like the previous FICO scores versions, like tracking of on-time payments, account balances, and other histories of credit for credit score calculations.
Before applying for a new credit there are a few features of the FICO score 8 models that you should be aware of. One of the crucial aspects of this model is that high utilization of credit lines can lower your score when you compare FICO score 8 with previous FICO score versions. So, you should be careful not to utilize the credit of more than 30% to keep your credit scores from dropping. Keep an eye on your credit score by checking at regular intervals. You can also check your credit scores for free at Experian.
What Are the Categories Considered when Your FICO Score 8 Is Calculated?
FICO score 8
There is no perfect way or exact methodology by which the FICO credit score is determined. However, there are five credit criteria that weigh the percentage given by the FICO score 8 model in comparison to the previous version.
Payment History – 35%
This is not only for FICO score 8, but is also the most common thing a creditor will look for when assessing a borrower. So, your payment history makes up 35% of your FICO score including the record of on-time payments, types of loans, and the amount you owe in any accounts that are delinquent.
Number of Accounts owned – 30%
You will not be seen as a high-risk borrower just because you own credit accounts, and owe them a debt with a low FICO score. But, using your available credit to an extent can make the lenders, and banks assume you have a higher chance of defaulting.
Credit History Length – 15%
Having a longer credit account history is good for your FICO score 8. This 15% can include the following factors:
- The age of the oldest and newest credit accounts, and the average of all your credit account ages.
- Specific time since the credit accounts have been established.
- Specific time since you used certain credit accounts.
Credit Mix – 10%
The mix of new and recent credit applications is considered in your FICO score, including retail accounts, loan installments, accounts of finance companies, and mortgage loans. It is not necessary that you have one of each kind in this credit mix.
New Credit – 10%
Your credit score can be viewed as a greater risk based on how many new credit accounts you open within a short span of time, even worse if you do not have a long history of credit.
- FICO score 8 is a type of credit scoring model.
- FICO score 8 is widely used by lenders to determine the creditworthiness and potential of borrowers, and the rate of interest the borrowers should be charged.
- There are many other credit scoring models, like Vantage score which is available through various other companies.
- The update made to the standard credit scoring model is FICO score 8, which is now majorly used by credit bureaus.
- Occasionally, the scoring criteria of FICO score 8 slightly reduce the impact of payments made late but are not very forgiving in terms of credit card balances that are high.
- It is not really necessary that lenders use the exact FICO 8 scoring system. They can use a customized FICO scoring version of an industry or other versions of FICO based on their priority.
Frequently Asked Questions
1. Is FICO score 8 the most important?
Yes, FICO score 8 is one of the most widely used credit scoring methods. The banks choose FICO score 8 methods due to the important criteria it has.
2. What is the average FICO 8 score?
The average FICO 8 credit score in the US is 716 and the average Vantage score is 695.
3. What is the highest FICO score?
850 is the highest credit score for both FICO and Vantage scores.
These are the most important, and must-know details about FICO score 8 that you should always keep in mind. If you are a person with no credit history or are new to opening a credit account you can easily increase your FICO score with ease. Even if you have some credit repairings to do, it takes a little time, but if you follow to fulfill the FICO score criteria mentioned in this article, you can gradually bring your FICO credit score up.
If you are someone struggling with a bad credit score, check out The Credit Pros to get your credit repaired.
Contact Us at 1-855-339-4464.