So, you’ve heard the whispers about FICO scores 8 and 9 but you’re not sure which one is better for you. Don’t worry you’re not alone. This whole FICO score thing can be a real head-scratcher. But fear not, credit-curious friend, because we’re here to break down the differences between these two scores and help you figure out which one matters most for your financial future.
The Lowdown on FICO Scores 8 and 9
First things first let’s get the basics straight. Both FICO scores 8 and 9 are used by lenders to assess your creditworthiness. They’re like your financial report cards, giving lenders a snapshot of how responsible you are with borrowing and repaying debt.
FICO Score 8 has been around for a while and is still the most widely used credit score by lenders. It takes into account your payment history, amounts owed length of credit history credit mix, and new credit.
FICO Score 9 is the new kid on the block, and it boasts some key differences from its predecessor. It considers the same factors as FICO Score 8, but it also takes into account paid-off collections, treats medical debt differently, and incorporates rental payment history.
The Big Showdown: 8 vs. 9
So, which FICO score is better? Well, it depends.
FICO Score 9 might be more favorable for you if:
- You have paid-off collections: FICO Score 9 doesn’t penalize you for past collections that have been settled.
- You have medical debt: FICO Score 9 recognizes that medical debt is often unavoidable and doesn’t weigh it as heavily as other types of debt.
- You make rent payments on time: FICO Score 9 rewards you for responsible rent payments, which can be a big boost if you have limited credit history.
FICO Score 8 might be more advantageous for you if:
- You have a long credit history: FICO Score 8 places more emphasis on the length of your credit history, which can be beneficial if you’ve been managing credit responsibly for a long time.
- You have a good credit mix: FICO Score 8 rewards you for having a variety of credit accounts, such as credit cards, loans, and mortgages.
The Bottom Line: It’s All About You
Ultimately, the best FICO score for you depends on your individual credit history and circumstances. If you’re unsure which score is more important for your financial goals, it’s best to check with the lenders you’re interested in working with. They can tell you which FICO score they use and what factors they consider when making lending decisions.
Bonus Tips for a Stellar FICO Score
There are general guidelines you can adhere to to increase your creditworthiness, regardless of the FICO score you’re concentrating on:
- Pay your bills on time, every time. This is the single most important factor in your FICO score.
- Keep your credit utilization low. Aim to use less than 30% of your available credit.
- Don’t apply for too much credit at once. Each new credit inquiry can lower your score.
- Become a credit card master. Use your credit card responsibly and pay it off in full each month.
- Dispute any errors on your credit report. Even small errors can have a big impact on your score.
By following these tips and understanding the differences between FICO scores 8 and 9, you can take control of your credit and build a bright financial future. Remember, it’s a marathon, not a sprint, so be patient and stay focused on your goals.
What’s the difference between base FICO® Scores and industry-specific FICO® Scores?
Base FICO® Scores, like FICO Score 8, are intended to forecast the probability of future nonpayment of any credit obligation, including mortgages, credit cards, student loans, and other credit products, as agreed upon.
Industry-specific FICO® Scores give lenders a more accurate credit risk assessment that is customized to the kind of credit the applicant is requesting, while also incorporating the predictive power of base FICO Scores. For instance, rather than using base FICO Scores, credit card companies and auto lenders may use FICO Bankcard or Auto Scores, respectively.
FICO® Auto Scores and FICO Bankcard Scores have these aspects in common:
- These scores could be used by many lenders in place of the FICO® base score.
- Each lender is free to choose which credit score to use and what other financial data to take into account when doing a credit review.
- The versions range from 250 to 900 (as opposed to the base FICO® Scores of 300 to 850), and higher scores are still associated with reduced risk.
FICO® Scores are evolving to keep up with modern behaviors and needs
Consider how people utilize various computer operating systems or possess older or more recent smartphone generations. Although they all have the same basic features, the most recent versions also include special updated features to cater to changing user needs.
The same goes for FICO® Scores.
The fundamental principles of the different FICO® Score versions are similar, and they are all capable of distinguishing between individuals who pose a higher risk and those who do not. Every time the FICO Score algorithm is modified, new features, cutting-edge risk prediction technology, and more recent consumer credit behaviors are all incorporated.
As a result, the credit process is eventually made simpler, quicker, and more equitable by giving lenders access to a more predictive score that aids in their decision-making.
WHAT IS A FICO SCORE || FICO SCORES EXPLAINED || FICO SCORE 8 || FICO SCORE 9
FAQ
Is FICO score 8 or 9 more accurate?
Do banks use FICO 8 or 9?
What does a FICO score 9 mean?
Is a FICO score of 8 good?
What is the difference between FICO score 8 and 9?
Though the FICO® Score 9 is an updated version of FICO® Score 8, the FICO® Score 8 is still the most widely used base score by lenders, meaning that, while you may have a better credit score from the FICO® Score 9 model, lenders are more likely to still use the previous version.
Could FICO score 9 improve your credit score?
For certain people, such as those with thin credit files, FICO Score 9 could be an improvement on the previous models, as the rental payment consideration in particular could help boost credit files and even scores.
Do FICO score 8 credit scores matter?
That all depends on what you want to do. In general, if you’re trying to get a new credit card, car loan or consumer loan, then your FICO® Score 8 credit scores can matter. Since FICO® Score 8 credit scores are the most widely used FICO® scores, there’s a good chance a potential lender may use it.
Do lenders still use FICO® score 9?
Even though FICO® Score 9 was officially launched to lenders in 2014, most lenders still use FICO® Score 8. Lenders get to decide on which version they use in their lending decisions, and FICO® Score 9 is only gradually being adopted. Over time, consumers might see slight differences in their FICO® Score 9 credit scores.