Have you ever wondered what is credit scoring? Credit scoring is a system creditors use to help determine whether or not to give you credit.
How does a creditor decide whether or not to grant you credit? Creditors use credit scoring systems to determine if you'd be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans.
Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report.
Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points (a credit score) helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.
Credit scoring is used because it is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals. Although you may think such a system is arbitrary or impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed.
A significant factor in determining your credit score is your payment history. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.
You may freely reprint this article provided the author's biography remains intact:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
Working under the most prestigious service of the country ?... Read More
Cars ? they are your passion, necessity, luxury, earning member.... Read More
Online payday loans companies offer quick approval with their online... Read More
Here is a useful guide to Home Improvement Loans. What... Read More
When trying to locate bad credit loans, many people find... Read More
For American students, the U.S. Government came up with a... Read More
A bad credit history is like having contracted an infectious... Read More
Homeowner loans are useful ways to get the things that... Read More
For the individual in need of cheap loans UK, it... Read More
If you considering using a Cash Advance Payday Loan service... Read More
Looking for a cheap personal loan can sometimes be a... Read More
If you've been thinking of getting a secured homeowner loan,... Read More
It's possible to receive up to 500 dollars cash overnight... Read More
While looking for adverse credit homeowner loans it can seem... Read More
A Payment Protection Plan is an insurance cover you would... Read More
Bad credit loans UK can sometimes prove quite difficult to... Read More
No one can say for certain where the history of... Read More
While most companies seeking venture capital initially think about angel... Read More
Parents should begin saving money early for their children's college... Read More
This is a common question that many consumers have. Many... Read More
Military signature loans are easy to come by. When looking... Read More
Listed below are some of the benefits of an unsecured... Read More
So you have decided you want a motorcycle and you... Read More
Outlined below is a guide to unsecured loans. It will... Read More
When borrowing money it is usually because we lack the... Read More
How many times have you been casually going about your... Read More
Do you need fast cash to get your car fixed... Read More
There is more than one type of loan. Depending upon... Read More
There can be more to a bank business loan than... Read More
What are the avenues available to businesses with weak credit... Read More
Confused by how to finance a small business? One key... Read More
Car loans are easier to get by using an online... Read More
Here is a useful guide to Bad Credit loans. Bad... Read More
Here is a useful guide to Homeowner Loans. A Homeowner... Read More
A car loans after a bankruptcy is one way to... Read More
Scene one: you are sitting on your office desk surrounded... Read More
You need to be wary of guaranteeing a loan. What... Read More
So here's the situation: you are buying a car but... Read More
You were on your regular walk with your wife, and... Read More
On average, homeowner households earn 95% more than renting households... Read More
When looking for loans for bad credit, many people find... Read More
Have you ever felt like you bought an auto and... Read More
Market research of UK's cosmetic surgery ascertains the fact that... Read More
Here is a useful beginner's guide to bad credit secured... Read More
Consumers buy a new or used car with poor credit... Read More
Payday loans are loans of a small amount, taken for... Read More
If you're like most people, then you've got debt in... Read More
There can be more to a bank business loan than... Read More
Living in the United Kingdom, you might find yourself in... Read More
Cash advance loans not only provide you with instant cash,... Read More
Big financial goals, no security to supply - it is... Read More
Different types of loans are available for almost every aspect... Read More
Borrowing money has become more and more popular in the... Read More
The opportunity to spend money is everywhere. There is no... Read More
Trying to get a bad credit personal loan can be... Read More
When looking for loans online, you might find yourself wondering... Read More
A UK Home Improvement Loan Can Give You The Home... Read More
Okay, so one day you wake up and realize that... Read More
A college loan has given people all over the United... Read More
For those individuals who are looking for fast and inexpensive... Read More
It is quite common for someone, who is having trouble... Read More
No one can say for certain where the history of... Read More
Before entering college, you may find yourself pondering exactly how... Read More
VA loans are basically mortgages or home loans geared towards... Read More
A student loan is an unsecured loan made by lenders... Read More
Some of the many benefits of a Home Improvement Loan... Read More
Loan |