The concept of credit and debt has been with us since the origin of civilization. It has evolved over the years to meet a wide variety of challenges and plays major role in how we conduct our modern affairs. The idea of using mathematics and statistics to determine a credit score was pioneered about 40 years ago by Fair Issac and Co in San Rafael, California.
This system was found to accurately predict financial risk and was adopted by lenders, insurers, landlords and employers -- even the legal system. It was brought into mainstream use during the 1980's as a way to quickly evaluate the risk associated with an individual.Today your credit score is the most important tool you can use when navigating the financial world. From buying a house to qualifying for a job, your credit score can either be your best friend -- or your worst enemy.
With so much emphasis on your Credit Score it is important to understand how your score is determined. Commonly referred to as your FICO (Fair Issac CO) Score, your credit score is a summation of complex algorithms used to determine your exact score. While the formulas are protected, we are given approximate percentages that help us understand what goes into making your score:
Three major bureaus dominate the market for supplying American lenders with credit scores. When you apply for credit, it does not come directly from FICO; instead each bureau has its own version with its own name.