Credit score – is a three-digit number based on the statistical analysis of loan records of a person (or company).
The amount of credit scores – is an indicator of creditworthiness. The bigger the number of scores, the more stabile the financial situation looks to the lender.
In the U.S. credit bureaus count credit points. The main market sector of credit bureaus is occupied by three companies: Experian, Equifax and TransUnion. The creditors (banks, shops, etc.) often refer to them to check the credit history of their clients.
Credit bureaus earn money by vending the collected information to credit companies and other interested persons.
You probably have a hunch that a definite scoring system, has some rules . And maybe you have heard such a notion as “FICO scores”. The question at issue is that there is a great deal of scoring systems and each credit bureau may count differently. Three biggest credit bureaus (Experian, Equifax and TransUnion) have selected a system of FICO, developed by Fair Isaac.
Method of calculating credit scores is not so recent. By the end of 70 years practically all major creditors used a formula for assessment of the credit score of clients and the reliability of their financial position.
The invention of credit scores was developed by two main leaders in the business – a mathematician Earl Isaac and Bill Fair.
These two enterprising men created in 1956 the company Fair Isaac. And everything that company created works fine to this day.
Originally the system had to prove its freedom from prejudice. Thus, the credit risk could not be associated with the race of man, his creed, color, etc.
Then, the question of upgrading the system arose – creating a common data bank. The reason for this was failure to update information about potential borrowers. Of course, everything changed when computers appeared, which greatly facilitated the task of storing data, and also helped to transfer it from one point to another when it was needed.
Monitoring of the credit history allows to keep track of its alterations, by increasing or decreasing the quantity of credit scores to avoid fraud of persons who can take advantage of knowing personal information about you.
Many people managed to take a loan for a house or a car, or anything else in those good times. And now they have to pay a definite amount of money each month. To be sure that everything is ok with your loan, use credit report monitoring. Of course, in most cases the things go well but don’t ignore credit monitoring – this is your financial safety.