A
credit score is a numerical expression based on a level analysis of a person's credit files, to represent the
creditworthiness of the person. A credit score is primarily based on a
credit report information typically sourced from
credit bureaus.
Lenders, such as
banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to
bad debt. Lenders use credit scores to determine who qualifies for a loan, at what
interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or
identity scoring prior to authorizing access or granting credit is an implementation of a
trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has much overlap with
data mining, which uses many similar techniques. These techniques combine thousands of factors but are similar or identical.
