FICO Score

Author: Terri Ewing | Date: September 4, 2008 | Filed In: Glossary

FICO Score Defined

A FICO score is one of the three credit scores calculated by the three credit repositories to determine your credit risk. Even though you have three different credit scores, only one is used for things like qualifying and pricing. For pricing and all other things that involve a credit score, the middle score is used. Experian uses the FICO® scoring algorithm which is a registered trademark of Fair Isaac Corporation but mortgage industry folks just use the phrase “FICO score” to describe a borrower’s middle credit score. It’s like referring to all cola soft drinks as “Coke”.

For example, if your three scores were 778, 760, and 765 then 765 would be called your FICO score. It would be used for pricing. If you are qualifying for a mortgage with your spouse, then you have to use the lowest middle score between the both of you to determine the FICO score.

Let’s say your credit is great but your spouse’s is not so good. Your scores are the ones we used earlier so your FICO would be 765 but your spouse’s scores are 621, 650, and 642. 642 would be the FICO score used to qualify you and for pricing. That can mean the difference between an approval and a denial or a much higher rate or costs.

Author: Terri Ewing