Credit score

A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual.[1] A credit score is primarily based on a credit report, information typically sourced from credit bureaus.[2]

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits.[3] Lenders also use credit scores to determine which customers are likely to bring in the most revenue.

Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Digital finance companies such as online lenders also use alternative data sources to calculate the creditworthiness of borrowers.[4][5]

  1. ^ Kagan, Julia. "Credit Score". Investopedia. Archived from the original on 2007-10-19. Retrieved 2021-05-24.
  2. ^ "What Is a Good Credit Score?". www.experian.com. 2021-02-11. Retrieved 2021-05-24.
  3. ^ "What is a Credit Score – Credit Score Range | Equifax". www.equifax.com. Retrieved 2021-05-24.
  4. ^ Experian; Karma, Credit; Hero, Student Loan; Tretina, more Learn about our editorial policies Kat. "What Credit Score Do You Need to Buy a Car?". Investopedia. Retrieved 2021-05-24.
  5. ^ Kagan, Julia. "Insurance Score". Investopedia. Archived from the original on 2006-03-17. Retrieved 2021-05-24.