What type of analysis does a credit bureau conduct to compute a borrower's credit score?

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The process by which a credit bureau computes a borrower's credit score involves a thorough examination of several key financial factors, primarily focusing on the borrower's payment history and outstanding debts. Payment history accounts for a significant portion of a credit score, as it reflects the borrower's reliability and ability to make payments on time. This includes information on any late payments, defaults, and the overall consistency of repayment behavior over time.

Outstanding debts also play a crucial role in determining a credit score. This includes the total amount of debt the borrower has, as well as credit utilization ratios, which assess how much of the available credit is being used. By analyzing these two components, credit bureaus can gauge the borrower's creditworthiness and assess the risk of extending additional credit.

Other factors such as savings accounts, property values, and market trends do not directly influence a credit score. The credit scoring process is primarily focused on the individual's borrowing and repayment history, making the analysis of payment history and outstanding debts the correct focus for computing a credit score.

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