What Is FICO Score 8?

Businesses rely on FICO credit scores most often when they want to understand whether someone is a good “risk” to pay back borrowed money. That makes getting up to speed on the most widely used version of its scoring system worthwhile. The more you know about the FICO 8 scoring model, the more control you can have in building or maintaining an excellent credit score.

FICO Score 8 is the most popular among lenders.¹ When lenders check your FICO credit score, whether based on credit report data from Equifax^®, Experian^®, or TransUnion^®, they’re likely using the FICO 8 scoring model range between 300-850.² A FICO score of at least 700 is considered a good score.³

Businesses also use industry-specific versions of credit scores. For example, the FICO Bankcard Score 8 is used when you apply for a new Credit Card or a credit limit increase. It’s very similar to the base FICO 8 score but provides added precision when opening a credit card account.⁴

With FICO Score 8, the factors that can impact your score include payment history, credit usage, length of credit history, types of accounts, and recent activity.⁵ Here are four important ways that FICO Score 8 differs from previous versions:

• It takes a more nuanced approach to late payments.
  A major factor in calculating your FICO score is your track record for making on-time payments. The FICO 8 scoring model introduced changes to how it treats late payments on a single account. While chronically late payments often negatively impact your score, this model treats one-time slipups more leniently than previous versions.
• Nearing a credit limit on a single card became more important.
  One of the most important factors affecting your credit score is your credit utilization ratio. This measures how much of your total available credit you’re actually using, so keeping this low can positively impact your credit score.
• Small collections squabbles no longer count.
  With the introduction of FICO 8, the scoring system stopped paying attention to any accounts sent to a collection agency with balances below $100.⁶
• Gaming the “authorized user” strategy was effectively stopped.
  Authorized users might learn how to build credit more quickly and responsibly when the main account holder has a strong FICO score. Family members might add a child or relative to a card account, while some repair businesses may promote a tactic called piggybacking, where you authorize strangers on your account to help people rebuild credit with credit cards.⁷ With FICO 8, the data scientists learned how to spot and exclude this type of usage during score calculation.⁸

Mortgage lenders may not use FICO 8 credit scores when you go to apply for a home loan. They’re typically more cautious in assessing a mortgage application for a large sum of money.⁹ They like to stick with earlier versions of FICO scoring algorithms, which take a more conservative approach to assessing risk.

• When a mortgage lender pulls your Experian FICO score, it is typically based on FICO Score 2.¹⁰
• Your Equifax FICO credit score for a mortgage will be based on the FICO Score 5 model.¹¹
• TransUnion uses FICO Score 4.¹²

FICO scoring models may contain more tweaks than major shifts, with new versions refining the weight of a few factors so businesses receive accurate estimations of your ability to pay back debts and keep up with credit card bills. Sometimes, changes are made because the business world gets better at understanding key differences between different types of debt. For example, medical debt has become an increasing reality for many families, given rising out-of-pocket medical expenses.

Before FICO Score 9, unpaid medical debt sent to collections may have had the same negative impact as a debt collection for nonessential spending. But spending on medical care is different from overspending on travel and entertainment. That’s why, following the introduction of the FICO Score 9, FICO credit scores started overlooking smaller amounts of unpaid medical debt sent to collection agencies.¹³