The most vital question surrounding every loan taken out will always remain the same: Can I rely on the debtor to repay?
- Credit scores were invented in the 1950s and relied on character judgements. When early credit agencies first started, representatives would often gather information from local businesses to find out if the applicant was reliable in paying the money that they owed.
- In the mid-50sBill Fair joined up with mathematician Earl Isaac to create a uniform, impartial credit scoring system that took off within two years. Today, this company goes by the name of FICO.
- The current FICO score system is today’s industry standard. Your score is a number measured between 300 and 850 and is based on your payment history, amounts owing, length of credit history, types of credit used, and credit enquiries. In Australia, Equifax is our credit reporting agency that stores everyone’s credit history and personal information.
Our credit systems are constantly evolving due to technological advancements. From reputation-based, qualitative assessments, to quantitative valuations based on data analysis – the process may change, but the basic principle will always stay the same.