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Have you ever received a tempting new credit card offer promising a low interest rate and a high credit limit, only to get a rejection letter in the mail when you apply?
That's likely because of your poor credit score. Your credit score is a numeric representation of how well
you have handled credit extended to you and a prediction of how well you will handle it in the future.
Your credit score has a big impact on your daily life. Whether it is applying for a department store credit
card, or getting your first mortgage, your credit score is the main factor used by lending institutions
such as banks when deciding whether or not to lend you money and how much interest to charge. Your credit score
tells lenders how likely you are to pay them back.
There are as many as 1,000 methods that can be used to calculate your credit score.
But the most common method used is FICO, which stands for Fair Isaac and Company. The company was started
in 1956 by an engineer, Bill Fair, and a mathematician, Earl Isaac. Together they developed a complex
mathematical model that weighs different aspect of your credit behavior to calculate your credit score.
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