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How Lenders Evaluate Your Credit

When lenders are trying to decide whether or not to give you a loan, one of the many things they review is your credit history. If you've managed your debts responsibly in the past, it shows that you're likely to pay back what you borrow — in other words, you're a "good" credit risk.
Lenders often buy both a credit report and a credit score from the credit reporting agencies: Equifax, Experian, and TransUnion. Some lenders create their own credit scores.
Credit reports
Your credit report is a detailed list of your credit history. It consists of information provided by lenders who have extended credit to you. The lender information may vary from one credit reporting agency to another, but includes the same types of information — which lenders have extended credit to you, what types of credit you have, your payment history with lenders, and more.
Identifying information such as your name, date of birth, and employment history is listed on your credit report, but is not used to determine your credit score.
Credit scores
In addition to the credit report, lenders may also use a credit score that is a numeric value based on the information contained in your credit report. That score (usually between 300 and 850) is calculated by a statistical mathematical formula that evaluates various types of credit report information.
The credit score identifies to the lender the level of future risk associated with your credit history, as compared to hundreds of thousands of other credit reports. The higher the score, the lower the risk.
Credit bureau scores are often called "FICO scores" because many credit bureau scores used in the U.S. are produced from software developed by Fair Isaac Corporation (FICO).
While many lenders use credit scores to help them make their lending decisions, each lender has its own criteria, including the level of risk it finds acceptable for a given credit product. There is no single minimum credit "cutoff score" used by all lenders, and there are many additional factors that lenders use to determine your actual interest rates.
Certain information provided by Fair Isaac Corporation, San Rafael, California.