# Understanding the Fico Credit Score Range

The standard FICO credit score ranges from 300-850 and is computed using a mathematical model invented by the Fair Isaac Corporation in 1956 as a vehicle to combat lending default and assess the risk of borrowers.

All three credit bureaus (Transunion, Experian, Equifax) use a slightly different version of the FICO credit scoring system.  Regardless, the original FICO system is still the most widely used credit scoring system—and also the most reputable.

## Where Are You On The Fico Score Range?  Credit Score Distribution According To Population

See where you fit in the FICO score distribution chart.

 PERCENTILE % OF PEOPLE SCORE DELINQUENCY RATE 2nd 2% 300-499 87% 7th 5% 500-549 71% 15th 8% 550-599 51% 27th 12% 600-649 31% 42nd 15% 650-699 15% 60th 18% 700-749 5% 87th 27% 750-799 2% 100th 13% 800-850 1%

And here is the graph of the population’s credit score range in a bar graph form:

A credit score is essentially a rating of the likelihood of you being 90+ days past due on your bill.  So if your credit score range is from 800-850, you have a 1% likelihood of being 90+ days late on your bill (as seen in the above graph).   You can also see that only 13% of the entire population of 18+-year-olds are in that credit range.  If your credit score range is between 300 and 400, then you are a high-risk borrower and have an 87% likelihood of being 90+ days late.  With a credit score in that range, lenders would be very hard pressed to lend you anything—even lenders specializing in loans for people with less than perfect credit.  Luckily, the majority of Americans are not in that credit score range.  Only about 2% of those with credit scores are in that population.  The crux of the population (27%) are in the FICO score range of 750-799.

## Recent Fico Credit Score Changes (FICO 08) That May Affect Your Credit Score Range

There was a major change to the FICO score formula several years back (called FICO 08) that promised to improve delinquency predictions by 5-15%.  So what exactly is new in the FICO 08 credit scoring formula?  Here are some of the changes in the way your FICO credit score is computed.

• Minor one-time delinquencies are now overlooked (such as unpaid utility bill)
• If a small bill (under \$100) went to collections, it will not affect your credit score
• Delinquencies more than 2 years old will not have as much of an effect on a person’s FICO score
• High credit utilization is more of a factor now than in the previous formula
• FICO 08 attempts to weed out credit piggybackers who are named authorized users on credit accounts solely for the sake of inflating their credit scores.  Legitimate authorized users who actually use the credit accounts they piggyback on are not affected by FICO 08.
• Not all lenders have adopted FICO 08 and some still use the old FICO credit scoring formula/system.

See How Well You Fare: Your Credit Score Vs. People Your Age Range
Age Range                   Average Credit Score
18-24                            638
25-34                            652
35-44                            659
45-54                             685
55+                                724
Here is a chart of the above information, courtesy of Credit Karma
These numbers should not surprise you since the length of credit is a determinant in your credit score.  Remember, the average credit score is 687 and the medium credit score 723.  Average and medium mean different things.

## Mortgage Savings According To Your Credit Score

Let’s look at the correspondence credit score ranges and how much money you save for a fixed 30-year mortgage:

Rates are current as of 5/10/2011:

\$250,000 mortgage with no PMI (that usually means a large down payment):

FICO Score Range          APR              Monthly Payment         Total Interest Paid

760-850                               4.36%                \$1246                                   \$198,561

700-759                                4.582%            \$1,279                                   \$210,412

680-699                                4.759%               \$1,305                                \$219,971

660-679                                4.973%             \$1,338                                  \$231,655

640-659                                5.403%            \$1,404                                   \$255,546

620-639                                5.949%              \$1,491                                  \$286,648

As you can see, you can save almost \$90,000 over the course of 30 years having a credit score range between 760-850 as opposed to a credit score range of 620-639.  That is a saving of almost \$3,000 a year!  Imagine what you can do with that \$3000 a year.

If you want to plug in your own credit score to see the savings, there are numerous calculators out there, such as the one from MyFico.

As stated the above, the FICO score range is between 300 to 850.  However, there has not been a reported case of anyone having a FICO credit score of 300 nor anyone having a perfect credit score of 850.

The FICO score range may seem large, but your goal should be to get your credit score beyond 720.  You will get close to the best rate if your credit score is above a 720 and the absolute best rate if you have anything above the 750.