What is a Credit Score?
A credit score is a numerical ranking system that lenders use to determine how much of a credit risk you are. A credit score is a numeric indication of how likely you are to repay debts such as loans or lines of credit. Lenders use this number to determine how much of a credit risk you are. Credit scores also are designed to indicate your creditworthiness in comparison with other consumers. Credit scores are based on the data in your credit report and are generated by computers using advanced analytical software. Usually a credit score is between the numbers 300 to 900. The higher your score, the more “creditworthy” you are to lenders.
The credit score basically tells a lender about the risk of lending money to you. If your credit report shows that you are inexperienced with credit, have been late with your payments, have borrowed the maximum amount, have mostly credit card accounts, and have many inquiries on your report, then your credit score will be much lower. These are risk factors. If your credit report shows that you are never late, have been borrowing money and paying it back for a long time, that you are not borrowing the maximum amount possible, that there is a good mix of different types of credit accounts both secured and unsecured, minimal attempts to secure new debt, then your credit score will be excellent indicating that you are a good risk to a lender.
A credit score is a numerical ranking system that lenders use to determine how much of a credit risk you are. A credit score is a numeric indication of how likely you are to repay debts such as loans or lines of credit. Lenders use this number to determine how much of a credit risk you are. Credit scores also are designed to indicate your creditworthiness in comparison with other consumers. Credit scores are based on the data in your credit report and are generated by computers using artificial intelligence. Usually a credit score is between the numbers 300 to 900.
A credit score is a numerical ranking system that lenders use to determine how much of a credit risk you are. A credit score is a numeric indication of how likely you are to repay debts such as loans or lines of credit. Lenders use this number to determine how much of a credit risk you are. Credit scores also are designed to indicate your creditworthiness in comparison with other consumers. Credit scores are based on the data in your credit report and are generated by computers using artificial intelligence. Usually a credit score is between the numbers 300 to 900. The higher your score, the more “creditworthy” you are to lenders.
Your credit score is a numerical representation of your statistical likelihood to repay credit that is extended to you. Scores range from 300 to 850 or higher, with average scores occurring in the 500-700 ranges. The credit score comes from a proprietary model developed by Fair, Isaac & Company® (often referred to as “FICO”). The model takes all the detailed account information from your credit report, and processes it with different weights and scoring factors, resulting in the score. Originally, Fair Issac took thousands of historical credit files on anonymous consumers and compared them with those consumers’ eventual default rates on credit accounts. From this perspective, certain factors on credit reports were determined to increase the consumer’s likelihood of repayment on a loan. Each of the three credit bureaus uses a version of the FICO scoring model. There are many variations on the basic FICO model that come from Fair, Isaac itself, as the company releases new versions from t
