Established in 1989 by the Fair Isaac Corp. from which it gets its name, a FICO score summarizes a consumer’s credit worthiness based on their financial history. The terms “FICO score” and “credit score” are often used interchangeably, though FICO is a registered trademark. Both provide a picture of how you’ve handled credit in the past, allowing lenders to assess the risk in lending to you. A higher score translates into better credit.
FICO credit scores are the only tools approved for use by government-sponsored enterprises like Fannie Mae and Freddie Mac to assess credit risk in relation to home mortgages.
Though the Fair Isaac Corp. uses a proprietary formula in conjunction with data in the consumer’s credit report to produce a score, they have detailed what details comprise the total figure:
The FICO company defines a good score as 670-739, but scores from 690-719 are considered good as well.
Landlords typically encounter credit scores in two situations: when they’re looking to purchase property and when they’re trying to fill a vacant unit.
When purchasing property, landlords use their own credit score to qualify for various financing options. Borrowers with good or excellent credit (above 740, according to Fair Isaac Corp.) unlock more financing choices and access to lower interest rates.
When filling a vacancy, landlords evaluate leads based on their credit score, among other factors outlined in their tenant credit check. A good rule of thumb is to accept tenants with a credit score of 560-850, but the acceptable range varies from property owner to property owner. Landlords may decide to reduce the amount owed for a unit’s security deposit for applicants with higher credit scores. They may also have a minimum FICO score they’ll accept to qualify leads.
To access your credit score, you can pay the FICO company directly through their website. Alternatively, your credit card issuer may offer free FICO scores on a regularly basis; NerdWallet highlights Bank of America and Discover as two such companies offering free credit scores to their customers.
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