Determining the difference between a FICO score and a credit score can be confusing, because they are often based on mutually inclusive information and sometimes may actually be the same number. Both are evaluations of a consumer’s credit worthiness. However, a FICO score is derived from a consistent formula, while a credit score is determined by varying formulas, from lender to lender.
The acronym FICO comes from Fair Isaac and Company, the company that developed the software used to calculate the resulting score on the three major credit reporting bureaus, Equifax, TransUnion and Experian. Fair Isaac and Company was founded in 1956 and merged with HNC Software in 2002.
Credit scores are used to determine whether a lender will grant credit, issue a credit card or offer a loan. The score is even used to determine what interest rate the credit will be granted at. Some lenders will use the FICO score alone, while others will use the FICO score in a combination with other information about the consumer to establish their own credit scoring system.
The higher a FICO score, the stronger the credit worthiness. However, credit scores determined without the FICO formula can be higher than the FICO score, but indicate weaker credit worthiness. These formulas are employed by the credit bureaus as well as potential lenders. Even when the FICO formula is applied across the three major credit bureaus, the score may vary, because each reporting bureau may have different information.
A FICO score can vary from month to month and even from week to week as the information on the credit report changes. For example, if you pay a credit card late, the late payment can show up and change your FICO score in one day. Conversely, if you bring a late payment history to current status, your FICO score will increase. These same actions can also impact your credit score.
Some of the information used to determine the FICO score includes the amount of credit you have, the amount of credit you use, how you pay your creditors, how long you have actually had credit and the types of credit that you have. Credit scores may also include how many times potential creditors look at your credit report, how long you have been at your current job and the number of times you have gone over your credit limit.
Darryl James, a syndicated columnist and freelance writer in the Los Angeles area has written for more than 15 years for "New York Newsday," "Pittsburgh Courier," "The Los Angeles Sentinel," "Women's Wear Daily," "Apparel News," "Rap Sheet" and more. James has written books and has just finished his first screenplay.