Credit scoring is determined by looking at the following characteristics: How does the applicant repay their existing obligations? How many inquiries or requests for additional credit or loans has the applicant had in the past 12 months? What types of delinquencies or other derogatory credit is on their account? How long has the borrower had established credit? What type of credit accounts does the borrower have? How much available credit does the borrower carry? How much of the borrower’s available credit is currently being used and what are the outstanding balances? Most major institutions use the FICO scoring system. Fair, Isaac and Company (now known as Fair Isaac Corporation), a California-based company specializing in the construction of statistical scoring models, created the FICO scoring system. FICO Scores range from 300 to 850. Each credit bureau calculates the FICO score based on the information within that bureau only and different formulas. This means that the three bureaus (TransUnion, Equifax, and Experian) may use different scores for an applicant. Also, lenders may choose to use a tri-merged credit report, getting information and scores from all three credit bureaus and merging them together into one consolidated report.
Posted on: Sun, 16 Feb 2014 05:51:58 +0000
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