Credit scores
are one of the many factors reshaping the
mortgage industry. Credit scores are used
extensively in bankcard and automobile lending.
Today, many lenders are placing more and
more emphasis on the scores.
Credit bureau scoring is a quantitative
method of projecting the likelihood of a
borrower repaying a loan. It measures the
relative degree of risk a borrower represents
to a lender. The most commonly used score
is the Fair Isaac Credit Bureau Score (sometimes
referred to a FICO). Fair Isaac bases its
forecast on actual credit data collected
on millions of consumers. The process identifies
distinctive credit patterns, each corresponding
to a forecast of the likelihood of loan
repayment.
The types of information typically used
in this calculation are:
·
Payment History
Outstanding Debt
Length of Credit History
Inquiries and New Account Openings
Types of Credit in Use
Fair Isaac score range from 450 to 850 with
the highest being the best. A Fair Isaac
score is calculated at each of the major
repositories and is based solely on the
data within that repository's individual
credit file. The scoring programs at the
three major repositories are:
Beacon - Equifax
Empirica - Trans Union
The Experian/Fair Isaac Model - Experian
Credit scoring does not use race, color,
sex, national origin, marital status, or
age as predictive characteristics. The borrower’s
income, assets, occupation, or time in present
home are also not considered.
To learn more about credit scoring, you
may contact:
Fair, Isaac and Company
120 North Redwood Drive
San Rafael, CA 94903-1996
Attention: North American Credit Bureau
Services
|
