 
About Credit Scoring Systems
A credit scoring system cannot use certain personal characteristics, as defined by the Equal Credit Opportunity Act. These include an individual's race, religion, sex, origin or marital status. If a scoring system uses age as a characteristic, it is obligated to give elderly persons equal treatment.
Different credit scoring systems and models can be used depending on the type of credit being applied for. As well, many generic forms of scoring systems have been developed by third parties. In all of the systems, characteristics are identified for either random samples or samples with similar financial histories. Each of these characteristics is given a score, based on it's perceived ability to determine credit risk. The characteristics are then statistically analyzed to determine creditworthiness.
There is no one, single credit scoring model used by all creditors. They differ in terms of the model itself and the characteristics used, and they can differ in terms of what type of credit is being sought. Generally speaking, changes in one factor used by the model affects other factors within the model. Discuss the model being used by the creditor in question to determine what factors are scoring most heavily.
The Consumer Federation of America offers information and articles about credit scores. Read through the FTC's information about credit scoring.
|
