How Many FICO Scores Are There, and What’s the Difference?

When it comes to managing credit, understanding your FICO score is essential. But did you know that there isn’t just one FICO score? In fact, there are several different versions of FICO scores that lenders use to evaluate your creditworthiness. Understanding how many FICO scores there are and the differences between them can help you make informed decisions about your credit.

What is a FICO Score?

The FICO score is a credit score developed by Fair Isaac Corporation (FICO) to assess a borrower’s creditworthiness. It ranges from 300 to 850, with a higher score indicating a lower risk to lenders. A strong FICO score can help you qualify for loans, get better interest rates, and even secure certain jobs that require credit checks.

How Many FICO Scores Are There?

There are several versions of the FICO score, each tailored to different purposes. The most common FICO scores are:

1. FICO Score 8

FICO Score 8 is the most widely used version by lenders. It’s the standard score used for most lending decisions, including credit card approvals, auto loans, and mortgages. The score is calculated based on five key factors:

• Payment History (35%): The record of your payments, including late payments and bankruptcies.
• Credit Utilization (30%): The ratio of your credit card balances to credit limits.
• Length of Credit History (15%): How long you’ve been using credit.
• Types of Credit in Use (10%): The mix of credit accounts (e.g., credit cards, mortgages, auto loans).
• New Credit (10%): The number of recent credit inquiries or new accounts.

FICO Score 8 introduced a few key changes, such as giving less weight to isolated late payments and removing paid collections from the score.

2. FICO Score 9

FICO Score 9 builds on FICO Score 8 but includes some improvements. Notably, it includes the following changes:

• Paid Collections: Paid collections (debts that have been settled or paid off) are no longer factored into the score. This gives a boost to people who have cleared old debts.
• Rental History: Rent payment history is now considered. For individuals with no credit cards or loans, this can help build a better credit profile.
• Medical Debt: Medical collections are given less weight. Unpaid medical bills have been a significant issue for many consumers, and this change helps reduce their impact.

Although FICO Score 9 has been around for some time, it is not as widely adopted by lenders as FICO Score 8, meaning it’s not as commonly used in credit decisions.

3. FICO Score 10 and 10T

FICO Score 10 and 10T are the newest versions, focusing on more predictive factors to better assess credit risk. The key difference in these scores is the treatment of trends in credit usage:

• FICO Score 10: This score places more emphasis on credit usage trends over time, such as increasing debt balances. It is designed to predict a person’s ability to repay debt over a longer period. If you have consistently high balances on your credit cards, this may negatively impact your score.
• FICO Score 10T: This version goes even further by considering a wider range of data, including trends in your overall credit behavior, such as how much you’re paying down debt each month.

These versions are used less frequently than FICO Score 8 but may become more common in the future.

4. FICO Auto Scores

FICO also has specialized versions of its score for specific industries, such as auto lending. The FICO Auto Scores (FICO Score 8 Auto and others) take a closer look at how likely you are to repay an auto loan, considering factors like the amount of your current debt and how it relates to the price of the car you’re purchasing. These scores may be slightly different from the general FICO Score 8.

5. FICO Bankcard Scores

Similar to FICO Auto Scores, the FICO Bankcard Scores are tailored for credit card issuers. These scores are designed to predict your likelihood of defaulting on a credit card. Like the FICO Auto Scores, FICO Bankcard Scores are based on the general FICO Score but weigh factors more closely related to your credit card usage.

6. FICO Mortgage Scores

Mortgage lenders use FICO Mortgage Scores, which are adjusted versions of FICO scores specifically designed for assessing a borrower’s ability to repay a mortgage. These versions take into account factors like your payment history and the amount of available credit.

Why Are There Different FICO Scores?

The reason there are different versions of FICO scores boils down to the fact that different types of loans require different criteria. For example, a lender evaluating an auto loan may place more weight on how well you’ve handled car payments, whereas a mortgage lender may focus more on your overall credit history and payment consistency. By offering specialized scores, FICO helps lenders better assess the risks associated with specific types of loans.

How Do You Know Which FICO Score Lenders Are Using?

Since there are several versions of the FICO score, it can be confusing to know which one is being used for your loan or credit card application. Generally, FICO Score 8 is the most commonly used score, but lenders may use different versions depending on the type of loan. For example, if you’re applying for an auto loan, the lender might use a FICO Auto Score, and if you’re applying for a mortgage, they might use a FICO Mortgage Score.

The best way to keep track of your score is to check your FICO Score regularly, as different scores may vary slightly depending on which version is used. You can obtain your FICO Score through major credit bureaus or financial institutions, many of which provide it for free as part of their services.

Conclusion

There are several FICO scores in existence, each tailored to different types of credit and lending needs. The most commonly used version is FICO Score 8, but newer versions like FICO Score 9 and FICO Score 10 are gaining traction. Understanding the differences between these scores can give you a clearer picture of your financial standing and help you make smarter credit decisions.

Regardless of which version is used, maintaining a high FICO score is always in your best interest for securing favorable credit terms and improving your financial health.