The Discover it® Balance Transfer is no longer available via CNBC Select; offer details mentioned below may no longer apply.
Your credit score is the key to qualifying for credit cards, mortgages, personal loans and a host of other financial products.
In the late 1980s, data analytics company Fair Isaac Corporation (now commonly known as FICO) saw the need for a simple yet effective way to interpret consumers' credit reports. This led it to createthe FICO score, a three-digit number that calculates your creditworthiness based on information reported to the three main credit-reporting bureaus, TransUnion, Experian and Equifax.
There are other credit scoring models but FICO is the industry standard, used in 90%of lending decisions in the U.S. There's also more than one FICO score: Your number might be different depending on whether you're applying for an auto loan or a credit card.
There’s what you need to know about FICO scores, including what determines yours and how you improve it.
What we'll cover
- What is a FICO score
- Types of FICO scores
- How is my FICO 8 score calculated?
- What is a good FICO score?
- FICO vs. other credit scores
- How to get your FICO score for free
- How to improve your credit score
- Bottom line
What is a FICO score?
A FICO score provides lenders with an indication of your ability to pay back debt. The higher your score, the less of a risk you represent to the lender and the more likely you are to be approved for a line of credit.
Basic FICO scores range from 300 to 850, but there are industry-specific scores that can range from 250 to 900. All FICO scores are calculated using your credit history — including your track record of on-time payments, how long you've had credit and how much of your available credit you're using.
That information is tracked by Experian,, TransUnion and Equifax. Since each credit reporting agency has slightly different information in its files, your FICO score can vary depending on which bureau a lender is working with.
Find the best credit card for you by reviewing offers in ourcredit card marketplaceor get personalized offers viaCardMatch™.
Types of FICO scores
There are dozens of different FICO scores. Some are used by credit card companies, others by mortgage lenders or auto loan providers, and each weighs factors in your credit history slightly differently.
The most widely used, FICO Score 8 isn't designed for a specific type of credit. Here are other common FICO score versions and what they’re used for:
- Credit card companies: FICO Score 3 and 9; FICO Bankcard Scores 2, 4, 5, 8 and 9
- Auto lenders: FICO Auto Scores 2, 4, 5, 8 and 9
- Mortgage lenders: FICO Scores 2, 4 and 5
- Newer versions: FICO Score 10, FICO Score 10 T, FICO Auto Score 10, FICO Bankcard Score 10
How is my FICO 8 score calculated?
Your FICO 8 score is a number between 300 and 850, calculated using five key metrics.
- Payment history (35%): Whether you’ve paid debts on time
- Amounts owed (30%): The amount of credit you’re using compared to your total credit limit, also known as your credit utilization rate
- Length of credit history (15%): The amount of time you’ve had credit
- New credit (10%): How often you've applied for and opened a new account
- Credit mix (10%): The variety of credit products you have, including credit cards, installment loans and mortgages.
What is a good FICO score?
FICO scores can be broken up into five ranges.
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Your credit score is a major factor in determining whether or not you'll be approved for different types of financial products, including credit cards.
The Capital One QuicksilverOne Cash Rewards Credit Card is aimed at consumers with fair credit, so if you have a FICO score of at least between 580 and 669, you may qualify. There is a $39 annual fee, but members get 1.5% cash back on all purchases and up to 6 months of complimentary Uber One membership statement credits.
Capital One QuicksilverOne Cash Rewards Credit Card
Learn More
Rewards
Unlimited 1.5% cash back on every purchase, up to 6 months of complimentary Uber One membership statement credits through 11/14/2024
Welcome bonus
None
Annual fee
$39
Intro APR
None
Regular APR
29.99% variable
Balance transfer fee
$0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Credit needed
Average, Fair, or Limited
Terms apply.
You'll likely need a score of at least 670 to qualify for theDiscover it® Balance Transfer, one of CNBC Select's top choices for balance transfer cards. Members enjoy a 0% intro APR on balance transfers for 18 months and on purchases for six months. (After that, it's a 17.24% to 28.24% variable APR.) There's a 3% intro balance transfer fee, up to 5% fee on future balance transfers.
You also get 5% cash back on up to $1,500 in purchases in rotating quarterly categories after you activate (then 1%) and 1% back on all other purchases. In a rare move for a balance transfer card, Discover will also match all cash back earned at the end of the first 12 months.
Discover it® Balance Transfer
Rewards
See terms
Welcome bonus
See terms
Annual fee
See terms
Intro APR
See terms
Regular APR
See terms
Balance transfer fee
See terms
Foreign transaction fee
See terms
Credit needed
Good/Excellent
*See rates and fees, terms apply.
Information about the Discover it® Balance Transfer has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
How to improve your credit score
A higher credit score can lower your mortgage rate, make it easier to rent an apartment and get you approved for a credit card with competitiverewards. Here's how to increase your score.
Make on-time payments
Your payment history is the biggest slice of your FICO score, so keeping on top of when your bills are due is critical. Setting up autopay or calendar reminders can help.
Get credit for utility bills
*Experian Boost™ is a free service that updates your Experian credit report with on-time payments to your mobile carrier, power company and other utilities not usually linked to credit-reporting agencies.
According to the company, users whose FICO scores improve see an average increase of 13 points.
Experian Boost™
On Experian's secure site
Cost
Free
Average credit score increase
13 points, though results vary
Credit report affected
Experian®
Credit scoring model used
FICO® Score
Results will vary. See website for details.
How to sign up for Experian Boost:
- Connect the bank account(s) you use to pay your bills
- Choose and verify the positive payment data you want added to your Experian credit file
- Receive an updatedFICO® Score
Learn more about eligible payments and how Experian Boost works.
Request a credit limit increase
If you increase your available credit without spending more, you'll lower your credit utilization ratio
Avoid opening too many new accounts
Not only will each application result in a credit check, if you're approved it will lower the average age of your accounts.
Request a copy of your credit report
If you've been denied credit, you have the right to request a copy of your credit report from the agency that issued it. But Experian IdentityWork℠ Premium reviews data from all three credit bureaus and informs users about score changes,new inquiries and accounts, changes to your personal information and suspicious activity. It will also provide regular updates on your basic FICO score.
Experian IdentityWorks℠
On Experian's secure site.
Cost
Basic: Free; Premium: 7-day trial, after $24.99 per month; Family: 7-day trial, after $34.99 per month
Credit bureaus monitored
1-bureau credit monitoring, alerts and reports: Experian, with Basic plan only and 3-bureau credit monitoring, alerts and reports: Experian, Equifax and TransUnion®, with Premium and Family plans only
Credit scoring model used
FICO® Score 8, with all plans
Dark web scan
Yes, with all plans
Identity theft insurance
Yes, up to $1 million with all plans
Terms apply.
*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.
The advanced version ofMyFICO® provides numerous FICO scores for $29.95 a month. You'll also have access to $1 million in identity theft insurance and 24-hour expert help if your identity is compromised.
FICO® Basic, Advanced and Premier
On myFICO's secure site
Cost
$19.95 to $39.95 per month
Credit bureaus monitored
Experian for Basic plan or Experian, Equifax and TransUnion forAdvanced and Premier plans
Credit scoring model used
FICO
Dark web scan
Yes, forAdvanced and Premier plans
Identity insurance
Yes, up to $1 million
Terms apply.
FICO vs. other credit scores
FICO is the industry standard for credit scoring but some lenders, especially credit card companies, rely on VantageScore, another model.
Both set score ranges from 300 to 850 and rank payment history as the most important factor in determining your score. However, FICO and VantageScore differ in exactly how they weigh and rank several other factors, such as the length of your credit history.
How to get your FICO score for free
Many credit card companies provide cardholders with a free credit score. Make sure your issuer uses FICO, though, and not VantageScore or another model.
In addition to linking phone, utility and streaming service payments to your Experian credit report, Experian Boost™ provides regular updates on your Experian FICO score.
You can get a free copy of your credit report from each of the three major consumer reporting companies by visiting AnnualCreditReport.com. These reports do not include credit scores, but reviewing the information on them can bring to light any errors that are hurting your score.
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Bottom line
Your FICO credit score is the key to a world of financial products. Before applying for a loan or credit card, find out if your score is high enough and make sure the information being sent to credit reporting agencies is accurate.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Read more
What Is the best credit score to have?
What credit score do mortgage lenders use?
How to find out if there are mistakes in your credit report
13 credit score myths debunked
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
For rates and fees of the Discover it® Balance Transfer, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
