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Credit Score Research Paper

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Credit Scores Credit score helps the lender evaluate a credit report because it is a number that summarizes credit risks. A credit score is a very important number and it helps apply for a credit card, loans, mortgages, etc. Credit score is determined by percentage, 35 percent is payment history. 30 percent is amount of money a person owes. 15 percent is how long the credit history is. 10 percentage is new credit, and lastly, the other 10 percent are the different types of credit a person has ("How is my score determined?"). This percentage method is called FICO score. it was founded by Bill Fair and Earl Isaac in 1956. Credit score is a mix of three numbers, a “excellent credit” score ranges from 720 - 850. “Good credit” ranges from 690 - 720. “Fair credit” ranges from 650 - 690. “Poor credit” ranges from 350 - 650. “No credit” ranges from 000 - 349. Depending on the credit score a person has, it’s how much they will pay monthly. if the have a low credit score they will end up …show more content…

A credit report is information about an individual on their credit history. A negative piece of information in your credit report and it will stay there for about seven years. ("Credit Report Definition | Investopedia") Credit rating determines if you get a loan. A high credit rating means that the borrower will most likely make payments on time. Poor credit rating tells the lender that the borrower has a habit of late payments. Credit ratings does approve if you get a loan or not, but it also determines the interest rate, the amount of money a lender will charge for the loan ("Credit Rating Definition | Investopedia"). Debt is used by everyone. It is a way to borrow money and pay back later. Usually a person will use debt when they can’t afford what they need at the moment. A borrower will take out a loan and later on pay back the money he

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FICO stands for Fair Isaac Corp., the company that over 50 years ago created what’s commonly known as the credit score. This credit or FICO score is a 3-digit number that determines the interest you will pay on credit cards, a car loan, a mortgage or other debts you may incur. It will also determine if a landlord will rent to you, utility companies will set up accounts without a large deposit, and can even be a factor in being hired for certain jobs or how much you’ll pay for car insurance.

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