IndexScore

IndexScore is a proprietary scoring system developed by Equifax to predict the likelihood of a consumer defaulting on a loan. It is one of several credit scoring models used by lenders to assess creditworthiness. Unlike traditional credit scores that focus on a broad range of credit behaviors, IndexScore is specifically designed for subprime lending and aims to identify individuals who may pose a higher risk of default.

The IndexScore model considers various factors from a consumer's credit report, including payment history, amounts owed, length of credit history, new credit, and credit mix. However, the weighting and specific interpretation of these factors may differ from other scoring models, reflecting its focus on the subprime market. Lenders utilize the IndexScore to make informed decisions about approving loan applications, setting interest rates, and determining loan terms for borrowers with less established credit histories or those who have experienced past credit difficulties.

A higher IndexScore generally indicates a lower probability of default, making the consumer a less risky prospect for lenders. Conversely, a lower score suggests a higher risk. The exact scoring range and the meaning of specific scores can vary, and lenders often have their own internal thresholds for using the IndexScore in their lending decisions. It is important to note that IndexScore is just one of many tools lenders use, and other factors may also influence their lending decisions.