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Credit Score
A credit score refers to the statistical summation of the information contained in the credit report of a consumer. In simple words, a credit score is the quick rundown of a credit report. It is generally sold by the credit bureaus to the lenders and credit providers.
With the aid of credit score, the credit providers decide whether to extend the loans or not, for the borrowers. Later they assess the risk involved in extending a loan to the borrowers and determine the interest rates according to the risk involved in it. Higher the risk involved, higher the interest rates.
The most well-known kind of credit score is the Fair Isaac or FICO score. This score stands for the answer from a mathematical formula that assigns numerical values to various parts of information in a credit report. FICO score is an acronym for Fair Isaac Credit Organization. It considers various factors in each of these five areas. They include payment history, current level of indebtness, length of the credit history, types of credit, new credit.
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