Learning Center






 
Additional Resources
Module 2
How Credit Affects You
Credit Reports and Credit Score
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Credit Scores

Prediction of ResponsibilityA credit score is a statistical formula used to predict how likely you are to repay a credit obligation, such as a mortgage loan. It’s important for your credit report to be accurate because your credit score is based on information in your credit report. When information in the report changes, your credit score also changes. For example, if you stop paying a loan, your credit score will go down. Or, if you begin paying all of your bills on time, your score may increase over time. Although credit scores consider a range of information, there are several factors that are not considered when compiling your scores such as your race, national origin, age, sex, marital status, and employment status.

Types of Credit Score Models

Different Models, Different ScoresThere are several different credit scoring models used today. Each credit bureau uses a different model and each model can generate a different score. The FICO score is used extensively in the mortgage industry. FICO scores usually fall between a low of 350 and a high of 850. Generally, the higher the FICO score, the less risk there is for a lender, and the more creditworthy a consumer is considered to be.

Credit Score ConsistencyThe Vantage score, developed jointly by the three national credit-reporting companies, has created a consistent way for the three agencies to provide credit scores. The Vantage score customarily ranges from 501 to 990 and includes a rating system similar to the academic grading system. Similar to the FICO score, generally, the higher the score, the more creditworthy a consumer is considered to be.

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