What is Precision Score?
The precision score is the name used for the TransUnion credit reporting agency’s NextGen credit model.
Understanding Precision Score
Looking at precision scores in general means, the lower the score the higher the risk for the lender, and the higher the interest rate charged. There are some credit model names, but credit rating agencies use comparable algorithms. Now this score shows risk for a lending house in order to lend money or give credit to borrowers. The Fair Isaac Corporation designed the NextGen scoring model, which created the FICO score. When we talk about FICO score we are talking about a type of credit score that is made by the Fair Isaac Corporation. On the whole, a FICO score that is above 650 shows a very good credit history. On the other hand, a score that is below 620 will likely make it hard for the borrower to obtain loans at favorable rates.
In order to know if one can be given loans, lenders also consider a borrower’s income, work history as well as the type of credit a borrower is requesting. Lenders use credit scores from Experian, Equifax, or TransUnion which are the three major credit reporting agencies.
Each of these agencies rates a consumer credit score differently based on the type of loan as well as the content of the applicant’s credit file with that agency.
However, a different credit score may result in the same person with the same agency if the application is for a credit card, an auto loan, a mortgage, or new utility services. Now any difference in scores between agencies would rely on the details of each credit bureau.
FICO score was made by the Fair Isaac Corporation thirty years ago. To give an industry-standard for scoring creditworthiness. That was fair to both lenders and borrowers.
A FICO score is a three-digit number that shows the creditworthiness of a borrower. It is the score that helps lenders to know how likely a person is to repay a loan. FICO score also affects how much you can borrow. How many months you have to repay. As well as what it will cost in terms of the interest rate.
Anytime you apply for credit. lenders need a fast and constant means of showing if or not to loan you money. And this is where your FICO score comes in. Thus you can think of the FICO score as a sum total of your credit report. This is because it measures how long you have had credit. how much credit you have, how much of your credit is being used as well as if you’ve paid on time.
Apart from FICO score helping lenders make smarter, quicker decisions. About who they are to loan money to. It also helps people in getting fair and fast access to credit when the need arises.
To have a FICO score, you must cultivate some responsible credit behavior like paying your bills on time and not carrying too much debt and ensure you make smart credit choices.