Beginning in the 1950s, with the founding of the company Fair Isaac and Co., the originators of the company started building credit scoring systems with very little interest from credit grantors. With persistence and the installation of credit systems with key credit grantors, over time Fair Isaac and Co. devised FICO scores, which measure credit risk, and successfully became the primary source for credit scoring.
Who Invented FICO Credit Scores?
FICO stands for Fair Isaac and Co., a company founded in 1956 by Bill Fair, an engineer, and Earl Isaac, a mathematician. The company philosophy was that data can improve business decisions when applied intelligently. Fair Isaac and Co. supplied consulting services and decision management systems. It is based in the U.S., specifically Minneapolis, Minnesota, but has spread all over the world, with offices in many countries.
1950s
In 1957, Fair Isaac and Co. developed and installed a billing system for Carte Blanche, one of the first credit cards. They began creating credit score systems in 1958, with little interest from credit firms but began a long-time association with Ward Montgomery in 1963 by putting together a credit scoring system for them. By 1970, they'd developed the first credit card scoring system and successfully started gaining interest from credit companies.
1980s
By 1981, Fair Isaac and Co. initiated Fair Isaac credit bureau. It is well-known for the development of custom software in the 1980s that determined credit risk based on a number determined from the examination of a person's credit history. The credit bureaus Experian, TransUnion and Equifax took on the number as their standard procedure. Experican, TransUnion and Equifax gather the data that is used to make up credit reports.
The New Millenium
In 2002, Fair Isaac and Co. merged with HNC Software, Inc. and embarked on the addition of fraud detection to their accumulation of milestones. They renamed the company in 2003, calling it the Fair Isaac Corporation. They continue to expand the company, celebrating their 50th anniversary in 2006.
How It Works
A person's FICO score can range from between 300 and 850. Banks and credit card companies use the score to determine how much risk is involved in lending patrons money. Though the system takes all parts of a person's credit history into consideration, it does not rate them all equally. A person's payment history makes up 35% of the score, total amounts owed takes 30%, length of credit history makes up 15%, new credit takes 10% and type of credit in use makes up 10%.
0 comments:
Post a Comment