The difference between a credit score and a FICO score

When looking up information about your credit score, you may have come across something called a “FICO score” and wondered what it was.

We have a look at what this has to do with a credit score, and we consider how credit scores are calculated by the credit bureaus.  

Tip: You can find out your credit score right now by signing up with CreditSav.

What’s a FICO score?

According to Vere Millican, executive of credit and data science at African Bank, FICO stands for Fair Isaac Corporation, and it’s a company that’s based in San Jose, California.

“A FICO score is a credit risk rating that’s predominantly used in the USA. Essentially, it’s a credit score, similar to what’s offered locally by TransUnion or Experian,” says Millican.

However, FICO is not a credit bureau. Rather, it provides a scoring system that the American credit bureaus make use of. This means that Americans will say that they received their FICO score from their local credit bureaus, rather than their credit scores.

FICO scores are weighted similarly to South African credit scores, with payment history being the most important factor, and credit utilisation being the second.

“A FICO score will not be the same across all credit bureaus, given that each institution uses slightly different approaches to score people. However, there’s likely to be a high correlation,” says Millican. 

READ MORE: Is your credit score valid internationally?

How do local credit scores work?

Millican explains, “Each person gets a credit score based on their credit profile. TransUnion, for example, scores from 0 to 999. The score bands used vary from credit bureau to credit bureau.”

“The system is used to determine the risk you pose to creditors. A credit score is a number – a healthy score will have a high number, and an unhealthy score will have a low number,” she explains.  

Millican says that when you apply for credit, lenders will extract information from the credit bureau about your account-paying habits, how long you have had credit accounts, how many accounts you have, any outstanding debt, and any action taken against you to recover debt.

“You are given points for each factor that helps credit providers predict how likely you are to repay a debt. The total points add up to your credit score,” says Millican.

Find out what your credit score is. Join CreditSav to access your credit score for life.