What is your FICO Score made up of?
Written By: Sam Kwak, Credit Coach @samkwakofficial
Ever wonder how your FICO score is created? Well here’s how! FICO stands for Fair Isaac Company and they’ve been around since 1956 and today, the FICO scoring model is being used commonly amongst the banks, credit card companies, or auto loan lenders to determine whether you’re a good fit as a borrower. Keep in mind, the FICO score is not the only score around. In fact, there are more than hundreds of different credit scoring methods used by different banks and credit card companies. So don’t bet 100% on your FICO score while it is still a largely used credit score. Now keep in mind, checking your FICO score WILL hurt your credit (hard inquiry) as opposed to checking your Vantage score (soft inquiry). Most credit monitoring websites or apps today use Vantage score. Popular apps like Credit Karma uses Vantage 3.0 score but keep in mind, most banks and credit card companies do not use Vantage 3.0 score. Use these credit monitoring sites to get a “rough idea” as how your credit score is.
Some of the credit card companies are now showing FICO scores because the card companies and FICO created an agreement as a benefit to you, the customer. If the card company offers you to check your FICO score for free as a way to monitor your credit, it won’t hurt your credit. ome of the credit card companies are now showing FICO scores because the card companies and FICO created an agreement as a benefit to you, the customer. If the card company offers you to check your FICO score for free as a way to monitor your credit, it won’t hurt your credit.
Also remember, your credit score isn’t everything to how good your approval rate is for loans, credit cards and mortgages. Banks or credit card companies sees your credit report which there are specific criteria that is checked before you’re approved or denied. For example, your late car payment may have more weight to getting you approved for a new car loan versus a new credit card. While a late car payment counts as negative for any situation, the weight of how it is measured may differ depending on who the lender is.