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Understanding a “F.I.C.0” Score

Created by Fair Isaac Corporation (FICO), FICO® Scores are used in 90% of lending decisions in the U.S. Lenders can
request FICO® Scores from all three major consumer reporting agencies — TransUnion, Equifax, and Experian — and
lenders use them to help make billions of credit decisions every year. FICO® Scores are developed based solely on
information in consumer credit files maintained at the consumer reporting agencies. When you apply for credit, your
FICO® Scores can influence the credit limit, interest rate, loan amount, rewards programs, balance transfer rates, and
other terms offered by lenders.
What makes up a FICO® Score?
Learning your FICO® Score can help you better understand your credit risk and your financial health.
A good FICO® Score means better financial options for you. Here are the factors that determine it.
What exactly is a FICO® Score?
It’s a three-digit number calculated from the credit information on your credit report at a particular point in time. It
summarizes information in your credit report into a single number that lenders can use to assess your credit risk quickly.
FICO® Scores, which are used by the vast majority of lenders, generally fall within the 300-850 score range.

How much do you owe and how much of your available credit have you used?
How much of your available credit is new?
What is your mix of credit cards, retail credit, student loans, mortgages, etc.?
Have you paid your past credit accounts on time?
How long have you been using credit?

What is a “good” FICO® Score?
With a FICO® Score, the higher your score, the better it is. The following chart shows a breakdown of FICO® Score
ranges found across the U.S. consumer population. It also provides general guidance on what a particular FICO®
Score range represents. Again, each lender has their own credit risk standards.
Did you know?
FICO offers a FICO® Score Estimator, which you can access at: SallieMae.com/EstimateScore
800 or higher
• The FICO® Score is in the top 20% of U.S. consumers
• Demonstrates to lenders that the consumer is an
exceptional borrower
580 or lower
• The FICO® Score is in the lowest 20% of U.S. consumers
• Demonstrates to lenders that this consumer is a very
risky borrower
• The FICO® Score is in the top 40% of U.S. consumers
• Demonstrates to lenders that the consumer is a very
good borrower
• The FICO® Score is near or slightly above the average
score of U.S. consumers
• Most lenders consider this a good score
• The FICO® Score is below the average score of
U.S. consumers
• Some lenders will approve loans with this score

Why do FICO® Scores change from month to month?
There are many reasons. FICO® Scores are calculated each time they are requested, so the calculation takes into
consideration the information that is in your credit file at that time. As the information in your credit file changes,
FICO® Scores can also change. Keep in mind that certain events, such as late payments or bankruptcy, can lower
FICO® Scores quickly.
What is a typical FICO® Score for someone just starting out with credit history?
A FICO® Score is a complex algorithm based on unique credit report data, so there is no “typical” or “entry-level”
score. Someone new to credit may have difficulty scoring in the highest score ranges, due to a limited number of active
accounts and length of history. Even if you’re starting out, it’s still possible to have a FICO® Score that meets
lenders’ criteria for granting credit.
How much credit history do you need to be considered “established”?
Many variables go into determining your FICO® Score. If you have a longer credit history, you’re generally determined
as a lower risk to lenders. As your revolving credit history lengthens and you pay your bills on time, this factor may have
less of a negative impact on your FICO® Score.
How can a higher FICO® Score save you money?
When you apply for credit — whether it’s a credit card, car loan, student loan, apartment rental, or mortgage — lenders
will assess your risk as a borrower. Your FICO® Score, along with other information, may affect not only a lender’s
decision to grant you credit, but also how much credit and on what terms (interest rate, for example). Keep in mind that
your FICO® Score is only one of the many factors lenders consider when making a credit decision.
On a $20,000, 48-month auto loan, a borrower with a FICO® Score of 720 could pay $131 less each month in interest
than a borrower with a FICO® Score of 580. That’s a savings of $6,288 over the life of the loan.
Note: The savings are due to the impact of each borrower’s FICO® Score on the interest rate they are offered

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