FICO Score vs Credit Score

Last Updated :

-

Blog Author :

Khalid Ahmed

Edited by :

prarthana Khot

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Table Of Contents

arrow

Difference Between FICO Score And Credit Score

The basic difference between the terms FICO Score vs credit score is their nature. A credit score is a general term for assessing the credit worthiness of a borrower by lenders and credit bureaus. FICO is a brand name for the credit scoring model. Credit bureaus use it for a borrower's credit rating. On the other hand, a credit score is a parameter of the creditworthiness of an individual, which banks, companies, lenders, and borrowers calculate using a credit rating tool like FICO. Hence, FICO comes after the lenders request creditworthiness for borrowers.

FICO Score vs Credit Score
Table of contents
  • Fico score vs credit score number helps determine an individual's creditworthiness. Credit bureaus use FICO-like credit scoring models to judge the credit worthiness of a borrower.
  • A credit score is a generic term for knowing the creditworthiness of an individual.
  • FICO is a specialized credit scoring model owned by Fair Isaac Corporation that aids in preparing the credit scores of borrowers.
  • In the United States of America, while analyzing with the same production techniques; the scoring model of FICO score 8 most commonly.

Comparative Table 

Here is a comparison table that depicts the differences between FICO score vs credit score:

Category FICO ScoreCredit Score
Basic DifferenceIt is a company conducting credit scores.It is a generic term for calculating a borrower’s creditworthiness by various companies using different parameters and softwares. An example includes the FICO company.
Model Of ScoringThe model of scoring is between 300 to 850It depends on the scoring model which the company is using at its disposal.
Adoption By IndustryIt is used by most lenders while going through the borrower’s application.It is a generic form of scoring which does not form the industry standards of credit rating but uses an industry-approved credit scoring model to gauge the credit risk and credit worthiness of bowers.
Excellent Score LevelThe ideal range for an excellent score is between 720 to 850.The ideal range of excellent scores varies from company to company based on their credit rating software. It differs by upto 100 points.
Time For Report GenerationThe company needs at least six months of data to prepare the report.It depends on the score generation company, with a minimum of one month.
Calculation Of ScoreIt is calculated using different parameters – payment record (35%), balance loan amount (30%), credit age (15%), loan mix (10%), and recent loan applications (10%)The different parameters and their respective weightage differ from credit scoring companies.

What Is FICO Score? 

FICO is the short form of Fair Isaac Corporation that prepares credit rating models. It is a United States company-owned brand and proprietary credit scoring model that assesses the creditworthiness of any aspiring or existing borrower applying for a loan from a financial institution. It is a three-digit number like any other credit score that assesses the risk in lending money. Credit agencies compile this score from the borrower's credit reports and credit history.

FICO scoring model is based on five different parameters - payment record (35%), balance loan amount (30%), credit age (15%), loan mix (10%), and recent loan applications (10%). Almost 90% of all the major lending institutions utilize the scoring before approving a loan.

FICO gives a varied output of scores depending upon the type of score the lender check and the type of credit bureaus use. Moreover, the higher FICO scores depict the exception creditworthiness, and the lower score depicts the worst credit record of a borrower. As a result, a higher FICO score enables an individual or business to get faster loan approvals by lenders and vice versa. 

The most generally used FICO® Score versions, along with their uses, are the following:

  • Most commonly used is FICO score 8.
  • For credit card approval, FICO Bankcard Scores 2, 4, 5, and 8 plus FICO score 3 are used. 
  • FICO Auto Scores 2, 4, 5, and 8 are used for auto loans.
  • FICO scores 2, 4, and 5 are used for mortgage lending.

What Is Credit Score? 

A credit score is a numerical depiction of a borrower's ability to handle and repay the loan per the loan schedule without default. Usually, a borrower's credit score is represented in three digits starting from 300 to 850 as per the punctuality of loan repayment by the borrower to assess the credit risk and creditworthiness. 

If the borrower is paying their loan on time, their creditworthiness will be high in the bracket of 740-850. However, if borrowers default in their credit history, their score will be less than 300-669. The borrower, the lenders, or financial institutions can generate a credit score by visiting credit bureaus' websites like Equifax, Experian, and Transunion. 

A good credit score is necessary for obtaining a hassle-free loan from any financial institution. The lender may use a variety of credit scores depending on the needs of the loan. For example, if a borrower applies for a housing loan, the lender may use the credit history of the housing loan. Moreover, the credit score may differ based on the use of the different scoring models, credit bureaus, or the loan criteria in practice by the lender. 

FICO Score vs Credit Score Infographics

FICO Score vs Credit Score Infographics

Similarities 

Here are some prime similarities between FICO and Credit Score: 

  • Both the terms are interchangeable when talking about credit scores.
  • Second, the FICO score vs credit score checks on an individual's creditworthiness for borrowing.
  • Third, an individual has to go through the creditworthiness test before applying for a loan that involves FICO as one of the credit scoring models by the credit bureaus.

Therefore, the FICO scoring model is integral to individuals' credit scores.