Credit Scores

In the United States, a credit score is a numeric representation of an individual's financial credit worthiness 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. A credit score is based on the information in an individual's credit report. Lenders such as banks and credit card companies use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate loss to bad debt. Examples of such uses include determining who qualifies for a loan, assigning an interest rate, assigning credit limits, and managing accounts that are already open (for example, treatment of accounts that are in default). The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system. While the most widely-known score in the United States is FICO (which is most widely used in the mortgage industry), there are many others, such as NextGen and Vantage Score.