Some thoughts of Fico Score
Fico Score
A credit score is an objective measure of credit risk. It summarizes the information from your credit history into a single number. This forms a basis for comparing borrowers. Borrowers with higher credit scores are more likely to pay their debts on time and as agreed. The most popular credit score is the FICO score developed by Fair Isaac Corporation. 3
Your credit score is simply a mathematical model that takes the information from your credit report and attempts to predict the likelihood that you will pay back your debts through a quantitative score. The higher your credit score, the higher the probability that the lender believes you will be able to pay back the money. This will of course be directly correlated to the interest rate that they will charge for you to borrow the money. Today’s lenders rely on a credit score called a FICO score, which is named after the company that creates the score for lenders, Fair Isaac & Co. 2
Want more? Then get some from Learn-About-swicki.eurekster.com/Fico Score
There is only one type of credit inquiry that counts toward your FICO score. When you apply for a mortgage, auto loan or other credit, you authorize the lender to request a copy of your credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in your FICO score. 6
Your FICO scoreis used by creditors to determine the overall credit riskof any individual consumer.Thisscore iscalculated by using a proprietary tool developed by the Fair Issac Corporation (NYSE:FIC). Each major credit bureau in the United States -Experian, Equifax (NYSE:EFX)and TransUnion -usesFair Issac’s technologyto calculate a FICO score for any borrower. The more information the credit bureau has on you, the more accurate their calculation of the FICO score will be. This is why youmay have a different FICO score from each of the three major credit bureaus. 1
For lenders who serve small- and medium-sized enterprises (SME), Fair Isaac recently began offering Global FICO? SME score. This newest member of Fair Isaac’s FICO scoring family of products combines the important data pertaining to the creditworthiness of the individual or individuals who own and manage the SME business with key characteristics about the business itself, to produce a powerful and predictive risk score that can contribute significantly to a lender’s ability to manage credit risk and expand the bottom line. The new score has already been adopted by a major lender in Turkey, and the company has received strong interest from other lenders in Europe and around the Pacific Rim. 5
Although the Fair Isaac Corporation’s web site offers to sell borrowers “their FICO score,” as if it were a single number, the company uses different scoring methods to rate a borrower’s suitability for three types of credit?mortgages, automobile loans, and consumer credit? It is not unusual for these scores to differ?by 50 points or more?for the same borrower. The score also depends on what credit reporting agency the data is obtained on, since not all creditors report to all three. The score Fair Isaac sells to borrowers is their consumer credit score, and the borrower can choose which agency the data is obtained from. 7
FICO is the acronym for Fair Isaac Corporation, a publicly-traded corporation (under the symbol “FIC”) that created the best-known and most widely used credit score model in the United States. The FICO score is calculated statistically, with information from a consumer’s credit files. The FICO score is primarily used in credit decisions made by banks and other providers of secured and unsecured credit. Banks and other institutions using such scores as a factor in their lending decisions may deny credit, charge higher interest rates, demand more collateral, or require extensive income and asset verification if the applicant’s FICO credit score is low. 4
Want more from Learn-About-swicki.eurekster.com/Fico Score
