History

In 1958, the Fair Isaac Corporation (FICO), a U.S. analytics company, developed the concept of credit scores.

How Scores Are Calculated

The three-digit score is calculated based on an individual's payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), new credit (10 percent) and types of credit used (10 percent).

What Scores Mean

A credit score predicts an individual's "creditworthiness" (how likely a person is to repay debts in full and on time). The higher a person's credit score, the better his credit. Lenders reward higher scores with lower interest rates on financing.

Good FICO Scores

The ranges of scores considered "good" vary slightly by lender, but in general, a credit score of 800 to 850+ is deemed "excellent." From 700 to 799 is "very good." (About 27 percent of people in the United States fall into the "very good" range.) Scores from 680 to 699 are "good."

Poor FICO Scores

Although the ranges of "poor" scores differ slightly depending on the source of the information, generally speaking, scores of 620 to 679 are considered "OK" or "fair." Between 580 and 619, credit scores are deemed "poor." Scores of 500 to 579 are "bad," and scores below 499 are "very bad."

Source:

acronyms.thefreedictionary.com: What Does FICO Stand For?

adjustcredit.com: FICO Credit Score Range and Meaning

myfico.com: What's in Your FICO Score?

More Information:

Credit Score Range

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