Your credit score is a computer-generated number that is designed to predict the likeliness you will abide by the repayment terms of a future debt or loan, based on the way you have handled debts in the past.
Credit scores were created to help lenders and banks to determine a person's credit worthiness in a more efficient manner. Before credit scores existed, bank underwriters were forced to read entire credit reports, line by line, to make a judgement on a loan application. This long and tedious process was extremely costly and prone to mistakes, so the Fair Isaac Corporation created a computer program to replace the human in the equation, by programming a software program to read an applicant's entire credit report and determine a number value, based on the data points in the credit report. This new software, called the FICO Score (R) made the underwriting process more efficient, more accurate, and less costly to the lender.
There are hundreds of credit score variations
, but the most commonly used version is the FICO Score(R). FICO scores are usually between 350 for the lowest score and 850 for the highest credit score possible.
Seeing as how all credit scores were designed to help lenders predict the likelihood you will repay future debt obligations, based on the performance of previous and current loans, it is critical to understand the scoring models assume everyone - even the most financially stable person in the world - is a credit risk. The banks and credit scoring models assume that even an applicant with an 850 credit score will default on a loan in the future.
To learn more about your credit score and how it is calculated, click here
BoostMyScore can help improve your credit score fast by adding tradelines to your credit report. To learn more, give us a call today: 1-800-531-1472