Beginning in 1995, our credit Society has morphed into a scoring system that will dictate how much you will pay for your purchases if you use credit. Prior to that, a bank loan officer or a mortgage company or a credit card company would have to actually review the report manually, whereas now, it is all automated using this FICO credit number.
Lenders, such as banks and credit card companies, use credit scores to assess the possible risk posed by lending money to consumers and to diminish their losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, employers, landlords, and government departments employ the same techniques.
We will go over the various scoring systems and how a credit score is affected by late payments and balances.We will also show how various scoring models from FICO to to FICO 10 T can vary. In the model we use, it will vary by 63 points.