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Referencing the chart above, it’s stating to a creditor that if an applicant has a 800+ FICO score then they know that only 1 out of every 1293 people with a score of 800+ will default on that loan. This is why people with higher FICO scores get better rates.
FICO scores are the most used credit bureau scores in the world. They heavily guard the algorithm used in determining your score, however, they have provided us an overview of what is used in the calculation. The below chart gives us a breakdown of the components used to determine your FICO credit score.
When analyzing these components, it’s pretty evident what the company looks for when determining the best scores. Here is a breakdown of each category in order of importance.