Credit Score

Credit score is a three-digit credit rating that represents an estimate of an individual's financial creditworthiness as calculated by a statistical model. A credit score attempts to quantify the likelihood that a prospective borrower will fail to repay a loan or other credit obligation satisfactorily over a specified period of time. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.

Credit Score

Credit Score

A credit score is typically based on the information in an individual's credit report. Lenders such as banks and credit card companies use credit scores to manage the risk posed by lending money to consumers.

Examples of such uses include determining who qualifies for a loan, assigning an interest rate, assigning credit limits, and managing accounts.

Credit Score Range 350 to 950

Varies by the scoring companies ... example FICO score range is 300 to 850; Experian FICO scoring scale is roughly 400 to 900; Equifax Scores range from 350 to 950; Fannie Mae range from approximately 300 to 900

Each credit bureau has its own unique system for compiling credit scores. However, the scoring models have been normalized so that a numerical score at one bureau is the equivalent of the same numerical score at another. Thus, a score of 700 from Equifax indicates the same creditworthiness as a score of 700 from Trans Union or Experian, even though the calculations used to determine those scores are different at each bureau.

Under mortgage lending guidelines

  • A score of 650 or above indicates a very good credit history
  • Scores between 620 and 650
  • Lenders will look for any particular credit risks before extending a large loan or high credit limit.
  • A score below 620 may prevent a borrower from getting the best interest rates

Credit scoring is a system creditors use to help determine whether to give you credit.
Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.

FICO score
FICO is an acronym for Fair Isaac Corporation (traded publicly under the symbol FIC) and often refers to the best-known credit score in the United States which is calculated using mathematical formulae developed by FIC.

The three major credit reporting agencies in the United States, (Equifax, Experian and Trans Union) calculate their own FICO scores, which go by different trademark names as well as many different versions of the score.

Experian Fair Isaac Risk Score, FICO Score, ScoreX

Transunion Empirica Empirica Auto 95 Precision Score and Precision 03

Equifax Beacon, Beacon 96 and the Pinnacle

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