What Is the FICO 8 Credit Score?

Definition & Examples of FICO 8 Credit Scores

All About FICO 8 Credit Scoring: Adopted by Equifax, Experian, and TransUnion Scores range from 300 to 850 Allocation of your score is based on the following: 35% payment history 30% credit utilization 15% credit age 10% recent applications 10% mix of credit

The Balance / Maritsa Patrinos

FICO Score 8 is a credit scoring model from Fair Isaac Corporation (or FICO, as it's often called) that is widely used by lenders to help determine how worthy potential borrowers are to obtain credit and what interest rate they should be charged. This version of the company's base credit scoring model was released in 2009.

Learn more about this model, including the five credit-related factors it takes into consideration.

What Is FICO Score 8?

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.

FICO Score 8 is a base score, meaning 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:

  • It pays more attention to high-use credit cards. If a borrower maintains a high balance and is close to reaching a card's limit, their score will more than likely be lowered more than under earlier models.
  • It is more forgiving of a single late payment in an otherwise solid payment history. However, it also penalizes more harshly for a pattern of late payments.
  • It minimizes any benefit from credit piggybacking or tradeline renting, the practice of paying a company to have yourself added to someone else's account—without actually gaining access to their account—in order to benefit from their better credit history.
  • It doesn't take into consideration debt collection accounts in which the original balance owed was less than $100.

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.

  • 35% for payment history: Includes your record of payments on all types of loans and the number of and amounts owed in any delinquent accounts.
  • 30% for credit utilization, or amounts owed: Includes such factors as the percentage of total available credit on all of a borrower's credit cards that is being used and the amount still owed on a loan paid in installments.
  • 15% for credit age, or length of credit history: Includes the age of your oldest credit account, the age of your newest account, and the average age of all your accounts.
  • 10% for new credit, or recent applications: Includes the number of new accounts you have opened as well as the number of recent requests by lenders to review your credit reports or scores.
  • 10% for mix of credit: Includes whether you have different types of credit accounts, divided into revolving (such as credit cards and home equity lines of credit) and installment (such as mortgages and student loans).

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.

Your credit card company or other lender may provide you with a credit score for free.

Alternatives to FICO Score 8

FICO 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.

A Consumer Financial Protection Bureau study found that consumers' credit scores had unfairly suffered from medical debt collections on their records, either because they were still creditworthy despite the debt or because they had already paid off the debt.

The VantageScore model was jointly developed by Equifax, Experian, and TransUnion and released in 2006. VantageScore Solutions LLC, which is jointly owned by the three credit reporting companies, holds the intellectual property rights to the model and updates it regularly. The latest version as of August 2020 is VantageScore 4.0.

Key Takeaways

  • FICO Score 8 is a credit scoring model developed by Fair Isaac Corporation.
  • It is the model most widely used by lenders to help determine how creditworthy potential borrowers are and what interest rate they should be charged.
  • It was released in 2009.