Credit Risk

Creditors look for ways to help them predict the future behavior of borrowers. They want to minimize their financial risk. Each creditor decides how much credit risk it can afford. Creditors and lenders use computers to measure credit risk.

Creditors evaluate credit risk using a tool called a credit score. Information from your credit report is used as the basis for your credit score.

Your credit score is a computer-generated number. The number predicts how likely it is that you will repay future debt.

The computer summarizes your credit profile and compares it to other profiles to calculate your credit score.

Your credit score takes several factors into consideration, such as payment history and number of credit accounts. Various credit scoring companies use different factors.

You'll learn more about credit risk and credit scores in the Understanding Credit Scoring section

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