What Is a Person's Credit Score & How Is it Determined?
The Fair Isaac Corporation, also known as FICO, created the algorithm use to convert your financial history into your credit score. This credit score gets used by creditors as they decide whether to issue you credit.
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Identification
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The credit score identifies the risk of a person defaulting on a future loan. According to the Fair Isaac Corporation, the credit score does not show whether a person will be a good or bad borrower.
Factors
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The FICO credit scoring model uses five weighted factors in figuring your credit score. Your payment history accounts for 35 percent, amounts owed counts for 30 percent, length of credit for 15 percent and your mix of credit and credit applied for recently each count for 10 percent.
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Sources
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Financial institutions, such as banks, report information about your debt accounts, such as loans and credit cards, to the credit bureaus. The three major credit bureaus in the United States are Experian, TransUnion and Equifax.
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