AÂ credit scoreÂ is a numerical expression based on a statistical analysis of a person's credit files, to represent theÂ creditworthinessÂ of that person. A credit score is primarily based oncredit reportÂ information typically sourced fromÂ credit bureaus.
Lenders, such asÂ banksÂ and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due toÂ bad debt. Lenders use credit scores to determine who qualifies for a loan, at whatÂ 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 orÂ identity scoringÂ prior to authorizing access or granting credit is an implementation of aÂ 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 a lot of overlap withÂ data mining, which uses many similar techniques. These techniques combine thousands of factors but they are more or less similar or the same.