Your Credit Scores

Why do lenders use credit scores?
While not all lenders or creditors use scores, those who do, use them to help make fast and unbiased decisions on which applicants are likely to pay them back. By using a credit score vs. a subjective interpretation or personal judgement more applications are approved (approximately 26% more).

Does credit scoring help me?
Yes. Scoring speeds and simplifies the credit application process. And because credit scoring is objective, there is less chance of lending discrimination. Applications can be evaluated fairly based on factors proven indicative of repayment performance.

What is in a scoring model?
Recent payment history, the amount of credit you have access to and are using, how long a credit history you have, whether you have been shopping for credit, notification of collection or public record items such as liens, bankruptcies, and judgements.

What is NOT in a scoring model?
By law, lenders and scoring models are prohibited from considering factors such as your race, religion, gender, marital status, and where you were born.

How can I improve my score?
The key to improving your score is to consistently pay bills on time. Credit scores are based on general repayment patterns, the mix of credit cards and loans you have, and inquiries caused by actively shopping for more credit.

Does my score change?
Yes. Your score changes every time information is added to your credit bureau file. Think of a score as a "snapshot" of credit risk - it reflects your risk picture at a specific time. When your credit information changes, your score changes to reflect that.

Are there different scoring models?
Yes. The Fair Isaac Co. score, called the FICO score is the most widely used and they have developed different models based on industry use such as auto, finance, collection agencies, mortgage lending, national credit cards, etc. This is another reason why your score may vary between applications submitted. Also, you will see different models being used because the three national credit bureaus - Equifax, Experian, and TransUnion - have developed their own generic models that compete with Fair Isaac's FICO score in the marketplace which allows them to not pay Fair Isaac a royalty each time a FICO score is used.

Remember, a credit score is a predictor of future performance, not a judgement of past behavior. Scoring allows lenders to identify individuals who are likely to perform well in future even if their credit information reveals past problems.