Credit providers use credit scores as a way to gauge risk. Credit scores based on payment history are a predictor of how well borrowers will pay their debts in the future.
By understanding credit scores and the way they work, you’ll be better prepared to make necessary changes to your financial habits and the way you make credit choices. Improving your credit score ranking can be easy once you know how credit scores are calculated and what lenders look for when making credit decisions. While improving credit is not an exact science, there are things consumers can do to raise their consumer credit scores over time.
The FICO Scoring System, 300-850
The FICO Scoring system is the standard scoring model for consumer credit, used by most lenders. FICO stands for Fair Isaac Corporation, the company that created the specific scoring model, and owns the rights to the formula used to calculate personal credit scores. While FICO scores range from 300 to 850, there are many factors that contribute to a specific number.
These 5 Critical Factors Affect Your Credit Score