script type="application/ld+json"> { "@context": "http://schema.org", "@type": "Product", "name": "Delancey Street", "aggregateRating": { "@type": "AggregateRating", "ratingValue": "5", "reviewCount": "10" } } Who Made The Credit Score | Delancey Street

 

Who Made The Credit Score – And Why It Matters So Much

Ever wonder, how the heck those three little digits – your credit score – came to rule everything? The number that dictates, whether you can buy a car, get a mortgage, rent that sweet apartment downtown. Well, let’s dive into the surprising truth, of who created this all-powerful metric.

Gambling on Trustworthiness to Make a Buck

So, who made the omnipotent credit score? It actually traces back, to a guy looking to make an easy profit – from people’s inability to pay back loans. The year, 1956. The place, newly booming postwar America.

Engineers Bill Fair and Earl Isaac had a thought: maybe there’s a way to predict whether somebody will default on payments. So, they founded a company – get this – called Fair, Isaac and Company, later shortened to FICO.

Using brilliant data science, FICO crunched info like peoples’ payment history, debt levels, and credit usage to generate a three-digit credit score. Lenders were willing to pay up, for this crystal ball into each person’s trustworthiness, as a borrower.

How’d They Calculate Trust into a Number?

FICO pored over data from lenders who’d issued loans, both paid back and defaulted on, looking for patterns. Factors like:

  • Payment history – do they pay on time?
  • Credit utilization – how maxed out are their balances?
  • Credit history length – any longstanding responsible habits?

Using mathematical models, they boiled trust down to a score. Today, 90% of top lenders use FICO’s magic formula, when evaluating borrowers.

Profit Made, but at What Cost?

Now, FICO’s a $3 billion giant. Pretty lucrative, for crunching some numbers about people’s money habits. But as their scoring has spread everywhere, deep questions have risen around:

  • Racial bias inherent in historical lending data
  • Unfair promotion of certain lending products over others
  • The immorality of reducing trustworthiness to an oversimplified digit
See also  Connecticut Business Debt Settlement Lawyers

So while FICO’s backstory is about good ol’ American profit-seeking – its impacts have huge societal repercussions. Food for thought, next time you go to check those three all-important numbers.

Game Over…Or Just Beginning?

Fact is, credit scores have now seeped into many people’s psyche as the key measure of financial responsibility. And, like it or not, they’ve become a form of modern social currency – opening access to not just loans, but jobs, apartments, even romantic partners who check scores before dating.

But their dominance could be waning. New startups are aiming to disrupt FICO with more holistic credit evaluation models. So while Bill Fair and Earl Isaac’s big idea transformed lending, their monopoly may not reign forever.

Does it make sense, that a few data points can truly sum up someone’s entire financial self? That’s the gamble we’re all participating in every day, whether we know it or not.

The Bottom Line

When Bill Fair and Earl Isaac pioneered credit scoring in 1956 to assess lending risk, they kicked off a revolution:

  • Reducing people’s financial reputations to a simple three-digit score
  • Allowing that score to increasingly control their economic opportunity
  • Sparking critics who say the system perpetuates biases and inequality

As the credit score’s grip tightens, will we see a people-powered pushback – or new innovations that level the financial playing field? Only time, and those three little digits, will tell.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
Leo
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
Jason
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
Mary
$350,000 MCA Restructured Over 2 Years

In The Media

Delancey Street CEO discusses ways to reward employees
Delancey Street CEO discusses the benefits of franchising on Forbes.
Delancey Street CEO discusses management on AMEX.
Beat Ctc Debt Collector

  Crush That CTC Debt Collector: A Merciless Gameplan They’re…

Is Pacific Debt Relief a reputable debt relief company?

  Is Pacific Debt Relief a Reputable Debt Relief Company?…

How is it possible for a bad credit to be fixed?

  Climbing Out of the Bad Credit Hole Sick of…

What is the effect of an AR factor on cash flow?

  The Brutal Truth: How AR Eats Into Your Cash…

What are the best credit card debt relief options?

  Crushing Credit Card Debt? Explore These Relief Pathways If…

Delancey Street simply gets it. You're talking to experts.
Steven Norris
Get Help Today

Ready To Get Started?

If you have questions, feel free to shoot us an email, or fill out our live chat.

Schedule Consultation