Most people, who know anything about personal finance, understand why a credit score is important. Far fewer people, however, know exactly what goes into determining a credit score. For the FICO score model, which the large majority of credit scores are based on, it’s best viewed as a pie chart of different categories.
Does age have an impact on credit scores? The short answer is yes. Data shows that different generations have distinct credit scores. Individual credit scores are used by financial institutions and lenders to determine eligibility for favorable rates and terms for financial products and services. For example, a higher credit score typically earns borrowers lower rates on personal loans.
In collaboration with Money Lion - These days, consumers have relatively easy access to their credit scores thanks to a wealth of online services. Knowing your credit score is important, because it sets expectations for the type of financial products (e.g., credit cards, loans) that you’ll be best suited to apply for, and it factors into other important life needs (e.g., finding a job, buying/renting a home).
Since its introduction in 1989, the FICO Score has reigned supreme as the most widely used credit scoring model in the US. The formula has gone through multiple iterations since, but if a consumer is applying for a loan or credit card, the financial institution on the other end is almost certainly using the applicant’s FICO score to help determine their creditworthiness.