A number that reflects the borrower’s credit risk level, typically with a higher number indicating lower risk. Credit scores are generated through statistical models using elements from the borrower’s credit history report, and change over time to reflect changes in the borrower’s credit history.
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A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. 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.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Digital finance companies such as online lenders also use alternative data sources to calculate the creditworthiness of borrowers.
English
Noun
credit score (plural credit scores)
- (finance) A measure of credit risk, usually for a consumer, calculated from credit information using a standardized formula.
