How do American credit scores work?

A credit score is a number between 300–850 that depicts a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors.

Do credit scores only exist in America?

Credit bureaus compile your financial information and use exclusive metrics to calculate your credit score (we use the FICO score in the majority of lending decisions here in the U.S.) Each country has its own systems, and your score will not necessarily translate to another country.

What is the American version of a credit score?

If you are traveling internationally, you will likely find that the American version of the credit score is a financial concept that is foreign to those living outside of the United States. Credit scores, as we understand them in the United States, are a measure of creditworthiness.

What is a good credit score and how does it work?

In the United States the credit scoring system you will hear about most is the FICO score, a score used by the major credit agencies to rate your creditworthiness. Your FICO score will be between 300 and 850 with a higher score being better.

When was the first credit scoring system created?

Although various methods of estimating credit worthiness existed before, modern credit scoring models date to 1956, when Bill Fair and Earl Isaac create their first credit scoring system. The FICO score was first introduced in 1989 by FICO, then called Fair, Isaac, and Company.

Why do credit scores vary from one credit bureau to another?

Credit scores provided by the three major credit bureaus — Equifax, Experian and TransUnion — may also vary because not all lenders and creditors report information to all three major credit bureaus. While many do, others may report to two, one or none at all.