When most lenders request your permission to review your credit report and score, they are referring to your FICO score. FICO scores are not the only credit scores available, but lenders depend on the FICO scoring model than any other when assessing lending risks. The Fair Isaac Corporation, which introduced FICO scores in 1958, owns the mathematical formula used to calculate FICO scores. A high FICO score indicates that you are likely to repay your debts and therefore present a low risk for lenders.
Maximum FICO Score
FICO credit scores range from 300 to the maximum credit rating a consumer can have: 850. Very few individuals ever earn a perfect FICO score. A FICO score of 850 is so rare than in 2005 the credit reporting agency TransUnion ran a contest through its TrueCredit credit monitoring service to find individuals with perfect credit scores, awarding each consumer with a FICO score of 850 a check for $1,000.
FICO Score Factors
A variety of information that appears on your credit report can influence your FICO score. The types of accounts you carry, the age of your oldest account, your payment history for current and past creditors and how much you owe all influence your score. A single derogatory item on your credit report, such as a late payment or collection debt, will prevent you from attaining the highest possible FICO score. Consumers with perfect credit have reports that demonstrate low debts, an impeccable payment history and a good balance of credit cards and loans.
The FICO formula uses the financial information present on your credit file to assign you a score. Because of this, your credit score may differ depending on the credit reporting agency that provided the report. Each of the major credit reporting agencies--Experian, Equifax and Transunion--collect information from your creditors but maintain different standards companies must meet before earning the right to file reports. Thus, the information on each of your credit reports will vary depending on which of your creditors report to all three agencies and which report to only one or two. Earning a FICO score of 850 with one credit reporting agency does not guarantee that you also hold a perfect credit score with the other two.
Just because you lack a FICO score of 850, that does not mean that you won’t qualify for low interest rates and other services and benefits that require a high credit rating. Lenders assign interest rates based on credit brackets. Credit brackets differ depending on the lender but, if your credit score falls into the highest bracket, lenders will offer you the same excellent rates that an individual with a maximum FICO of 850 would receive.
- Consumer Reports: Credit Scores – Which Ones Do Lenders Use?; June, 2009
- Federal Citizen Information Center: Your Credit Scores
- WebWire: Wanted -- The Elusive 850 – TrueCredit Launches National Hunt for Perfect Credit Score; January, 2005
- MyFICO: What’s In Your FICO Score; 2011
- Adventures in Education: Understanding Credit Reports; 2011
- Experian. "What Are the Different Credit Scoring Ranges?" Accessed Sep. 20, 2020.
- myFICO. "What is a FICO Score?" Accessed Sep. 20, 2020.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.