From Wikipedia, the
free encyclopedia
A credit score is a numerical expression based on a statistical analysis of
a person's credit files, to represent the creditworthiness of that person. A
credit score is primarily based on credit report information, typically
sourced from credit bureaus.
Lenders, such as banks and credit card companies, use credit scores to
evaluate the potential risk posed by lending money to consumers and to
mitigate losses due to bad debt. Lenders use credit scores to determine who
qualifies for a loan, at what interest rate, and what credit limits. The use
of credit or identity scoring prior to authorizing access or granting credit
is an implementation of a trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile
phone companies, insurance companies, employers, landlords, and government
departments employ the same techniques. Credit scoring also has a lot of
overlap with data mining, which uses many similar techniques
Business and consumer
identity scores
Identity scoring was originally developed for use by financial services
firms, to measure the fraud risk for new customers opening accounts. Typical
external credit and fraud checks often fail to detect erroneous background
information.
Identity scoring is also being tested as a means for financial institutions
to comply with criminal investigations and antiterrorism measures such as
the Bank Secrecy Act (BSA) and the USA PATRIOT Act. Usage of fraud
verification tools and third-party authentication systems to verify
identities and “red flag” suspicious activity is greatly enhanced by
identity scoring. |
