Precision Score

AAA

DEFINITION of 'Precision Score'

A number used by the TransUnion Credit Bureau to quantify the credit worthiness of borrowers. Precision scores used to be called Empirica scores before TransUnion started using the NextGen scoring model. These scores will determine how risky it is for a lending institution to lend money to borrowers.

Don't be fooled by the name though, there are many companies that use this score but call it something else. They include:
- Experian, who uses the term "FICO Advanced Risk Score".
- TransUnion, who uses the term "Precision".
- Equifax, who uses the term "Pinnacle".

INVESTOPEDIA EXPLAINS 'Precision Score'

With precision scores, the lower the score the higher the risk for the lender, thus more interest is charged. Every bureau uses different names for their credit rating even though all use the same algorithm. The NextGen scoring model was created by the Fair Isaac Corporation and is used by each bureau - the only difference in scores will be from the information that is available to the credit bureau.

RELATED TERMS
  1. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  2. Credit Report

    A detailed report of an individual's credit history prepared ...
  3. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  4. FICO Score

    A type of credit score that makes up a substantial portion of ...
  5. Beacon Score

    A number generated by the Equifax Credit Bureau to rank an individual's ...
  6. Credit Bureau

    An agency that researches and collects individual credit information ...
RELATED FAQS
  1. How is my credit score calculated?

    The credit score, commonly referred to as a FICO score, is a proprietary tool created by the Fair Isaac Corporation. This ... Read Full Answer >>
  2. How can I improve my credit score?

    If you are looking to take out a loan or apply for a credit card, then it will be very important for you to have a good credit ... Read Full Answer >>
  3. How does lower borrowing costs affect new airlines in the aerospace industry?

    Lower borrowing costs can help a new airline afford to obtain aircraft as well as pay for operating expenses such as salaries ... Read Full Answer >>
  4. What do creditors have to report to credit bureaus?

    Creditors are not required by law to report anything to credit bureaus, although many businesses choose to report on-time ... Read Full Answer >>
  5. How do I get a higher limit on my credit cards?

    Before applying for a higher credit limit, it is important to demonstrate responsibility. One way to do this is by making ... Read Full Answer >>
  6. Does shopping for the best interest rate affect my credit score?

    Shopping for interest rates does not necessarily affect a person's credit score. When a borrower submits an application to ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    5 Keys To Unlocking A Better Credit Score

    Follow these tips and techniques to rebuild a ruined credit rating.
  2. Credit & Loans

    7 Tips For The Do-It-Yourself Debt Manager

    Hired gun not in your budget? Learn to be your own credit counselor.
  3. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  4. Professionals

    The Advantages That Older Entrepreneurs Enjoy

    Entrepreneurs typically have more experience, more collateral, and more connections when they are in their fifties, and are thus more likely to succeed.
  5. Credit & Loans

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  6. Credit & Loans

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  7. Credit & Loans

    Top Credit Cards For The Ultra Rich

    Only a few people qualify for these elite cards. The question is, are the lush perks big bucks can buy you worth the cost?
  8. Credit & Loans

    Is My Credit Score Useful Outside The U.S?

    If you're hoping that your credit score will follow you overseas – or worried that it will– here's a quick primer on how your score will add up abroad.
  9. Credit & Loans

    Is It Worth Paying To Check Your Credit Score?

    Generally, a free credit report is all you need. If you've had some credit issues, it may be worth buying your credit score to get a finer level of detail.
  10. Entrepreneurship

    What Is Microlending And How Does It Work?

    Microlending can produce great return on investment for the lender while benefiting borrowers who wouldn't otherwise secure funding.

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center