How to Use Data Analytics to Get a Perfect Credit Score

September 24, 2010
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Credit Score 200x300 photo (data analytics)

Credit Score 200x300 photo (data analytics)

Data analytics can help you with the most analyzed and fretted over piece of data, your credit score.  This score is a key ingredient, but hardly the only measure, of your ability to get loans at low interest rates. Like the 300 game in bowling, or poker’s elusive Royal Flush, only the best FICO score will bring piece of mind for the score-obsessed. These are the folks who analyze their score regularly and try some unusual tactics for gaining points and building credit.  Money magazine explains that reaching this financial Nirvana — the epic 850 score — is both science AND an art. For devotees, the FICO number is the clearest data visualization there is – either your number is rising or not. A combination of factors go into your score – including the types of credit cards or loans you hold, the payment histories, length of credit and new accounts used or old ones closed.  Websites such as credit.com or freecreditreport.com offer comparisons to other people in your peer group, credit score monitoring or tips on improvement.  The payoff for high scores are lower-than-average interest rates on car loans and mortgages.

FICO began as Fair, Isaac & Co. which pioneered the use of predictive analytics, real-time data from neutral networks and models that managed various data sources at massive scale to predict the behaviors, suitable loan amounts and repayment chances of a wide range of transactions. FICO scores underpin more than 65 percent of the world’s credit cards and are applied to insurance, banking and other industries.

So, are you analyzing changes over time and keeping score of your score?  Whether you watch blood pressure numbers, bank balances, FICO scores or golf handicaps, trend information and patterns will tell you more – that’s the power of data analytics and data visualization.  Are there seasonal changes, or short-term setbacks that could result in long-term gains?  The Money article features people who have taken out loans they didn’t need simply because repaying it would boost a score, or monthly updates to see if the score has moved.

David Wallace
Spotfire Blogging Team

Image Credit: Microsoft Office Clip Art