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Fair, Isaac Score ModelFair, Isaac Credit Bureau Scores were designed to measure the relative degree of risk a potential borrower represents to a lender, based on extensive research into credit use patterns and actual credit data. collectively these are called FICOŽ scores but they are also known as BEACONŽ at Equifax, EMPIRICAŽ at Trans Union and the Experian/Fair, Isaac Risk Model. What Determines a Credit ScoreA consumer's FICO score is calculated from credit data contained in a repository's files. The score does not include income, assets, or any demographic data in its calculation. What it does include are:
A Fair, Isaac Credit Bureau Score ranges from approximately 300 to 850. A higher score indicates the borrower has better credit quality, meaning they are less likely to default on a loan. In other words, a borrower with a score of 720 is less likely to default than a borrower with a score of 650. The Fair, Isaac score models at each credit bureau are similar and scaled to indicate a similar level of risk. Scoring FactorsA credit report may be requested with or without a credit score. A credit score is generated using information at one of the three national credit repositories. Each report with a credit score is accompanied by the top for reasons the score is not higher. These score factors can be relayed back to the borrower to explain how they can improve their credit rating over time. InquiriesConsumers shopping for a new auto or home loan may have their application presented to a number of lenders in a short period of time, resulting in many inquiries. To minimize the negative impact of shopping for credit, auto and mortgage related inquires that occur within a 14 day period are treated as a single inquiry. In addition, the model uses an "inquiry buffer" that ignores all mortgage and auto-related inquiries within 30 days of the scoring. For more information about Credit Scores and how to repair your credit rating, visit our library of helpful articles. |