A Better Way to Manage Your Everyday Money - Book - Page 264
Your creditworthiness
Your creditworthiness for borrowing money is measured a great deal by lenders with your credit
score, your debt-to-income ratio, and possibly your net worth. There are other metrics that may
come into play depending on the type of loan for which you're applying, but your credit score is
an important creditworthiness number that you can monitor and change with appropriate
handling of your day-to-day finances.
The most widely used credit scores are FICO Scores, the credit scores created by Fair Isaac
Corporation (fico.com). Ninety percent of top lenders use FICO Scores to help them make
billions of credit-related decisions every year. FICO Scores are calculated based only on
information in your credit report maintained by the credit bureaus: Experian, Equifax, and
TransUnion.
By comparing this information to the patterns in hundreds of thousands of past credit reports,
FICO Scores estimate your level of future credit risk: how likely you are to repay a loan on time.
Most credit scores have a 300-850 range. The higher the score, the lower the risk to lenders. A
