FICO score is another name for Credit score. Often, the FICO score called Beacon credit score. This is because one of the largest consumer credit agencies, Equifax, has been marketing the FICO scoring algorithm under the name of BEACON.
First, let's get one myth out of the way: FICO definition or algorithm is different between the three credit agencies, TransUnion, Experian and Equifax. This is incorrect - see FICO Score Myths for explanation.
Second, let's present the latest FICO scoring model from Fair Isaac Corporation - NextGen. Yes, your credit score generated by the three agencies is not called FICO or BEACON any more - it is NEXTGEN score now. Just like it was with FICO score, the bureaus each market their Nextgen credit scores under a different name. They are as follows:
Experian - FICO Advanced Risk Score (used to be FICO)
Equifax - Pinnacle (used to be BEACON)
TransUnion - Precision (used to be EMPIRICA)
What's considered by the latest FICO algorithm?
At this point, it is a bit of a speculation because very little is known yet about the newest FICO definition... but here's an approximate breakdown for the old FICO. According to our recent investigation, the newest NextGen score definition may be only slightly different from or very close to the following:
Percentage of Score | Criteria
- 35% based on: Late Payments, Bankruptcies, Collections, Judgments
- 30% based on: Current Debts
- 15% based on: How long accounts have been open and established
- 10% based on: Type of credit (credit cards vs. finance company loan, etc.)
- 10% based on: Applications for new credit or Inquiries
The score is based solely on credit report data, and on all credit related data, not just negative data.
What FICO represents?
The FICO score represents the likelihood that you will make your payments on time or 'as agreed' in the future. It defines its number based on patterns in your credit history and by comparing them to patterns of thousands of other people.
The FICO score is simply an index of risk. It sets lender's expectations to whether or not you will repay a loan on time. The higher the score, the lower the risk.
The FICO score may differ from bureau to bureau because it considers only the data in your credit report at that bureau. And the information the credit bureaus have on you differs... TransUnion may have most of the information on consumers living in the Mid-West while Experian and Equifax serve mainly East, West coasts and South, and would have less information on Mid-West consumers.
Please keep in mind that in order for a FICO score to be calculated, your credit report must contain at least one account which has been open for six months or longer. Also, your report must contain at least one account that has been updated in the past six months.
