How do credit scores work? 2 finance professors explain how lenders choose who gets loans and at what interest rate

  With the cost of borrowing money to buy a home or a car inching ever higher, understanding who gets access to credit, and at what interest rate, is more important for borrowers’ financial health than ever. Lenders base those decisions on the borrowers’ credit scores.

  To learn more about credit scores, The Conversation consulted with two finance scholars. Brian Blank is an assistant professor of finance at Mississippi State University with expertise related to how firms allocate capital as well as the role of credit in mortgage lending. His colleague at Mississippi State, Tom Miller Jr., is a finance professor who has written a book on consumer lending, in addition to providing his expertise to policymakers.

I worked at Capital One. Hacks like this are most dangerous for low-income people.

  The Capital One breach announced recently compromised the data of 100 million Americans, which is nearly 40 percent of all U.S. adults. After the Equifax, Target, Home Depot, and Marriott hacks, it can be easy to shrug off the news of another leak, but one group of consumers is at particular risk in the Capital One breach: 80,000 Americans who applied for secured credit cards with the company.

  The hacker, Paige Thompson, gained access to personal information such as income, address, and credit scores for seemingly all recent applicants to Capital One credit cards. For secured card applicants, who tend to be low-income, bank account information was compromised as well.