What is a credit
score (FICO score)?
By Mary K. Phillips
credit score (a numeric score from 500 – 800) is a numerical index which
represents an estimate of an individual's financial creditworthiness used to
predict the relative likelihood that you will repay a credit obligation:
applicant's credit card history; amount of outstanding debt; the type of credit
used; negative information such as bankruptcies or late payments; collection
accounts and judgments; too little credit history, and too many credit lines
with the maximum amount borrowed.
Lenders, such as banks and
companies, use credit scores to determine credit limits and interest rates.
Higher scores generally indicate lower risk to lenders and can mean a better
interest rate and lower payments. The most well-known credit score in the
mortgage industry has been developed by Fair, Isaacs and Company and is often
referred to as the FICO score.