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A FICO score is a credit score
developed by Fair Isaac & Co. Credit scoring is a method of determining the
likelihood that credit users will pay their bills. Fair, Isaac began its
pioneering work with credit scoring in the late 1950s and, since then,
scoring has become widely accepted by lenders as a reliable means of credit
evaluation. A credit score attempts to condense a borrowers credit history
into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal
how these scores are computed. The Federal Trade Commission has ruled this
to be acceptable. Credit scores are
calculated by using scoring models and mathematical tables that assign
points for different pieces of information which best predict future credit
performance. Developing these models involves studying how thousands, even
millions, of people have used credit. Score-model developers find predictive
factors in the data that have proven to indicate future credit performance.
Models can be developed from different sources of data. Credit-bureau models
are developed from information in consumer credit-bureau reports.
Credit scores analyze a borrower's credit
history considering numerous factors such as: |
