 What is a credit risk score?
A credit risk score is a number that tells a lender how likely an individual is to repay a loan, or make credit payments on time. This is a statistical summary of the information contained in a consumer's credit report.
- FICO score
The most well known type of credit risk score is the Fair Isaac Corporation or FICO score. The FICO score is a sophisticated mathematical processes that calculates the summary by assigning numerical values to various pieces of information in the credit report. The credit bureaus provide risk scores to credit grantors who use them to objectively evaluate an applicant's credit-worthiness. The score itself is relative and is viewed differently by creditors depending on different factors, including the creditor's risk level, marketing goals, and business practices. Your risk score will change over time as your credit history develops.
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