Introduction To Credit & Credit Scoring

Fair, Isaac and Co. is the San Rafael, California Company founded in 1956 by Bill Fair and Earl Isaac. They pioneered the field of credit scoring for financial companies. They have expanded their enterprise to cover decision systems, analytics and consulting. Every credit agency, and most lenders, calculate your credit score using software from FICO (Beacon) or in house software based on the FICO rating system.

The modern credit reporting system, maintained by major credit bureaus, helps credit grantors approve loans and credit in minutes. The system provides continuously updated information to make fast, accurate decisions dealing with almost all consumer credit transactions. The credit reporting system benefits everyone. Consumers with a credit record reflecting prompt payment find it comparatively easy to open new or expanded credit lines.

Without credit, the best opportunities in our society are unquestionably out of reach. Our society has created something of a class system, where the credit unworthy are restricted to a lower station. They rent apartments, drive only used cars, pay in cash, forego vacations, and skimp on Christmas gifts for their children. And while this might seem harsh, we could probably all accept discrimination between the credit worthy and the credit unworthy if only the discrimination were fair and accurate. Yet, today, a large percentage of those tagged "credit unworthy" are truly responsible citizens who have suffered financial hardships that were out of their control or they are citizens who have been wrongly disadvantaged by inaccurate credit reports. Information on your credit report is formulated to create your credit score.

Your credit score has become increasingly important in today's world. A low credit score can increase the interest rates you pay on credit cards and loans. A very low credit score can even raise the cost of your vehicle insurance. Many employers review credit scores of potential employees.

Your credit score is made up of a three-digit number generally ranging between 350 and 850. The higher the score the better. Your credit score serves as a snapshot of the risk you represent to a credit grantor.

INTRODUCTION

FACTORS THAT INFLUENCE YOUR CREDIT

THE CREDIT SYSTEM

RISK FACTORS

HOW MUCH DOES A LOW SCORE COST YOU

HOW ARE CREDIT SCORES CALCULATED

WHAT CAN YOU DO

MAINTAINING AND IMPROVING YOUR CREDIT SCORE