7 Commonly Missed FICO® Score Facts

A FICO® Score is a great way to assess your credit health, so it's important to understand how the FICO Score works and what it does and doesn't include.

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A FICO® Score is a key indicator of how well you've managed credit in the past, as well as in the present. The more you understand how the credit scoring model works, the easier it will be to know which actions can help or hurt your score and how to build and maintain a solid credit history.

Whether you're getting started building your FICO® Score or you just want to learn more about how your score works, here are some facts you may not know.

1. FICO Is Not a Credit Bureau

Fair Isaac Corporation is an independent analytics company that provides credit scoring models to help predict how likely consumers and small businesses are to pay back a loan. While the FICO® Score calculation uses data found on your credit reports with Experian, Equifax and TransUnion, FICO does not maintain its own database of credit reports, and it's not owned by the credit bureaus.

As such, if your FICO® Score needs some work or isn't what you thought it was, you'll need to take a look at your credit report to understand why and which areas you can address to increase your score.

2. Your FICO® Score Includes Rental Payment Data

Even though rent payments aren't technically “credit,” FICO has found that paying your rent on time is predictive of paying other credit obligations on time. All new versions of its scoring model have included reported rental data.

With that said, those payments must be reported to the credit bureaus in order for them to be included in your FICO® Scores. If your landlord doesn't already report your payments, look for opportunities to change that. Companies like Rent Reporters, Rental Kharma, Level Credit and many more offer this service to landlords or tenants, typically for a fee.

3. Your Utility and Phone Payments Can Also Be Included

As with rent payments, monthly utility and phone bills can also be included in your FICO® Scores, but they generally aren't because utility and telecommunications companies don't report them to the credit bureaus.

Experian Boost is a free tool that can allow you to include these payments in your Experian credit file, but that doesn't extend to your credit reports with Equifax and TransUnion. There are other entities claiming such services, but be sure to read the fine print defining their service and to understand if they charge fees for the service.

4. The FICO® Scores are Neutral and Objective

FICO's scoring models are designed to consider only variables that are predictive of credit risk. As such, they don't include many personal details, such as your gender, race, national origin, zip code, income, employment history and many other details.

If you want to build or improve your FICO® Scores, the factors that go into your scores are transparent, making it easy to know which steps you can take to accomplish your goal.

5. There's a FICO Scoring Model That Uses Alternative Data

While traditional credit data provides lenders with strong insight into how likely a prospective borrower is to pay back a loan, it doesn't always tell the full story.

That's why FICO created the UltraFICO® Score, which includes alternative credit information, such as bank account data, to provide lenders with a clearer picture of how you manage your money. For people who don't rely heavily on traditional credit, the UltraFICO Score could make it easier for them to get credit for responsibly saving and spending.

Overall, 90% of the credit-eligible U.S. population can be scored by one or more FICO scoring models.

6. The FICO® Score Is Used by 90% of Top Lenders

The FICO® Scores are far from the only credit scoring model out there. In addition to other scores, some lending institutions use their own proprietary scoring models to help them make decisions.

However, FICO® Scores are used by 90% of top lenders, so it pays to know your FICO Scores.

7. FICO® Score Factor Percentages Aren't Exact

You may have seen that your Payment History makes up 35% of your FICO® Scores, Amounts Owed make up 30%, and so on. These assigned percentages are designed to show how important these factors are generally. However, the exact breakdown of each factor will depend on your unique credit profile.

For example, when you're just starting out with credit, having a good mix of different types of credit can be much more beneficial compared to someone who's been using credit for a decade or two. Additionally, new hard credit inquiries may not have as much of an impact on your FICO® Score if you generally use credit wisely and have a great score compared to someone with poor credit who frequently applies for new credit and does not get approved.

Regardless of how these percentage breakdowns work out for you, the important thing is to focus on developing good credit habits over time.

The Bottom Line

Having a good FICO® Score is crucial to a solid financial plan, so it's important to understand how your score works and how your actions impact it. Take time to learn more about the relationship between your actions and your FICO Scores, and how building and maintaining a good FICO Score can help you save money on future debt.

Get your FICO® Score from FICO, for free. No credit card required.

Ben Luthi

Ben Luthi has been writing about money and travel for seven years. He specializes in consumer credit and has written for several major publications and industry leaders, including U.S. News and World Report, Fox Business, Wirecutter, Experian, and Credit Karma.