What Is A Good Credit Score

Credit scoring is a systematic technique that employs statistical models to measure a person's credit worthiness based on his credit history and present credit accounts. In the 1950s, the idea of credit scoring was first initiated but it wasn't widely used until the early 1980s. During that time, the three primary credit bureaus (Experian, Equifax and TransUnion) partnered with the Fair Isaac Company to create standard credit scoring models.

Lending institutions regularly use credit scores when determining who receives their loans. These creditors can order your FICO (Fair Isaac Company) score from one of the primary bureaus. Your credit score is generated from information on your credit report. Individual lending institutions also take into account other details like your salary and employment history.

Determining Your FICO Score

Each credit bureau uses its own specific process when generating credit scores. To have some consistency, the scoring models were standardized so that a credit score with one credit bureau is the same with the other two credit bureaus. A credit score of 650 from TransUnion signifies the same creditworthiness as a credit score of 650 from Experian or Equifax.

Generally speaking, the higher your credit score is, the more favorable consideration you will receive from lenders. If you have a credit score of 650 or higher, then your credit history is considered good by most lending institutions. If you manage to keep your credit score above the 650 threshold, obtaining credit should be a fairly simple process. Lenders will consider you to be a low risk candidate and will grant you favorable interest rates in most cases.