The allusive perfect FICO score is 850 and more people than ever are getting there. Capital One offers CreditWise, an online tool that lets you simulate what will happen when you make changes to your lifestyle, with less accounts, more credit and other factors. Other versions are out there, and it kind of fun to see how the process works.
But the issue at hand is that the FICO score now sees more people at the top of the ranking. The FICO score is so pervasive in the US and many other markets, that it is news when there is a shift. The segment is growing, the perfect FICO 850, is still only 1.4% of the US market, based on the range between 300 to 850.
• Some 200 million U.S. consumers have FICO credit scores, while just under 3 million
• But over the years the number has become much more than that—it’s now an American totem of success or failure, hope or despair, security or risk.
• While there are competing models, almost anyone with a credit card knows that a number typically ranging between 300 and 850 holds huge sway over their financial life.
• This year, the average national FICO number is 700
Without a FICO score, or something that works as well, the credit card world would require hundreds of additionally underwriters to plod through piles of data which the FICO score condenses into a simple three digit number.
• It used to be that your credit score was a big mystery, or you had to pay to see it.
• Now credit card companies can’t wait to show you your score, for free.
• But those three-digit numbers you get every month aren’t necessarily the ones lenders use.
• In reality, you have dozens of scores, some based on previous versions of FICO scoring models and others developed by the three big credit bureaus.
• And your score will vary by the lender’s industry—mortgage, auto loan, credit card, and telecom services.
Plenty of good factoids in this article; it is worth a read. Also, here is a recent Mercator research note on what to do when there is insufficient bureau data.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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