What is a Credit Score?
A credit score assigns a numerical value to the various items of information we consider in evaluating a credit report. These numerical values are based upon the analysis of repayment histories of large numbers of consumers. Various factors are used to determine the borrowers credit score number, including, but not limited to, length of credit history, derogatory credit history, proportion of available and current credit balances, number of open accounts, number of recent inquiries, and number of recently opened accounts. There are several types of credit scores available and a borrowers score may vary depending on the type of score a lender requests. Generic credit scores were created for general use in making lending decisions and are based on credit data only. FICO (Fair, Isaac, & Company) scores are one type of generic credit score. FICO scores range from approximately 400-900. The lower the score, the greater the risk of default. Examples of FICO scores include Equifax BEACON, Tra
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. Generally, the higher your score, the more “creditworthy” you are to lenders.
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable. Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information in an attempt to best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data proven to indicate future credit performance. Models can be developed from differe
