Lenders use both a FICO score and a credit score to evaluate a person’s creditworthiness, but these are two distinct types of credit scores.
The Fair Isaac Corporation (FICO) calculates a credit score known as the FICO score. Lenders and creditors widely use FICO scores to determine a person’s creditworthiness. These scores are based on credit report data from the three major credit bureaus: Equifax, Experian, and TransUnion. FICO scores range from 300 to 850, with higher scores indicating better creditworthiness.
A credit score, on the other hand, is a broader term that can refer to any type of credit score used to assess a person’s creditworthiness. While lenders widely use FICO scores as credit scores, other types of credit scores, such as VantageScore and the Credit Karma score, also exist. These scores may use different formulas and factors to calculate creditworthiness, and they may have different score ranges.
Lenders and creditors use both of these scores to evaluate a person’s creditworthiness when they apply for credit, such as a loan, mortgage, or credit card. The scores take into account factors such as payment history, credit utilization, length of credit history, new credit, and types of credit used. Having a high credit score or FICO score can make it easier to get approved for credit and may result in better interest rates and loan terms.
It’s important to note that the credit score or FICO score you receive may vary depending on the credit bureau or scoring model used. Additionally, factors such as credit inquiries, late payments, and high levels of debt can lower your credit score or FICO score. Regularly monitoring your credit score or FICO score and taking steps to improve your creditworthiness can help you maintain good credit and access better credit opportunities.
