What is a credit score?
In the United States, a credit score represents the creditworthiness of a person, which is the likelihood that the person will pay his or her debts. Your credit score is a numerical expression of your credit history, based on a statistical analysis of your credit files; it is primarily based on credit report information, typically sourced from credit bureaus / credit reference agencies. Other countries might use similar scoring systems. However, for most people in other countries, a credit score is a simple annoyance, usually involving distracting advertisements on homepages, which ask visitors to subscribe to dubious offers to obtain their credit scores.
Lenders, such as banks and credit card companies, use credit scores to evaluate the risk posed by lending money to consumers, and to mitigate losses caused by bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and under what credit limits. Using credit or identity scoring before authorizing credit is the sign of a trustworthy system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies and government departments, employ the same techniques. Credit scoring also overlaps with data mining, which uses comparable techniques. Each credit bureau system utilizes many credit scoring systems internally. With technology developing quickly, we expect credit scoring algorithms to be updated ever more frequently.
The good news is that you can continue to trust and apply Today’s Credit Solutions formula—REMOVE + BUILD + SETTLE = CREDIT MAXIMIZATION—regardless of the updates the credit bureaus make to their scoring modules.