Credit Score

A credit score is a numerical index which represents an estimate of an individual financial creditworthiness. It is based on a subset of the information in a person's credit report. Lenders, such as banks and credit card companies use credit scores to determine credit limits and interest rates.

Creditors can give a faster answer to applicants for credit or loans when using a credit score number based on the applicant's credit history. The credit score consists of three digits, and it helps creditors determine the risk level of lending money to an applicant. Although the final result doesn't differ, the credit score is quicker and less subjective than the credit report. The system gives points according to information in the credit report, then, the final score has to compare with similar profiles of the other consumers. This evaluation helps lenders to predict if the loan will be repaid, and will the payments be on time. When the credit score is high, it is possible to get instant credit at electronics and department stores.

The best-known credit score in the United States is the FICO score calculated using mathematical formulae developed by the Fair Isaac Corporation. The three major American credit-report agencies (Equifax, Experian, and TransUnion) all use variations of this scoring formula under different names. The best-known are the Beacon score and the Emperica score.

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