CREDIT
The Credit Score
A credit score is a calculation that is designed to give credit issuers an instant picture of how credit worthy an individual is. Consumers with the highest scores are considered better credit "risks" and therefore are more likely to be offered the most favorable terms, or lower interest rates on a loan or credit card agreement. A person’s credit score determines whether or not they can buy a house or car, and can even determine whether they are offered certain jobs (mainly in the financial services industry).
Currently, lenders are using the FICO Score, Fair Isaac and Co., to determine a person’s worthiness of credit. A FICO Score is a number between 300 and 850, 850 being the highest score. However, changes are being made to how credit scores are computed and a new credit score, VantageScore, will eventually take place of the FICO score. The VantageScore is a number between 501 and 990 where each bracket is given a letter grade corresponding with an applicant’s credit worthiness. (501-600=F, and 901-990=A). Both credit scores, however, are calculated based on a few simple factors.
FICO Score vs. VanatageScore
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Sources:
- Five Tips to Build Your Credit
- VantageScore Information
- FICO Score Information
- More Score Information
- 5 Myths About Your Credit Score
