Auto-Loan-Financing.com has scoured the web to find the best financial articles to help peole repair bad credit or fix their
personal finances. Each article is written by leading finance or automotive industry experts.
Ever wonder how a creditor decides whether to grant you credit? For years, creditors have been using 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. Here's how credit scoring works in helping decide who gets credit -- and why.
What is credit scoring?
Credit scoring is a system creditors use to help determine whether to give you credit.
i. 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.
ii. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles.
iii. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt.
iv. 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.
v. Because your credit report is an important part of many credit scoring systems, it is very important to make sure it's accurate before you submit a credit application.
To get copies of your report, contact the three major credit reporting agencies. These agencies may charge you up to $9.00 for your credit report.:
Article content is copyrighted by their respective authors. Auto-Loan-Financing.com makes no claim to ownership of the
articles. The Articles provided are solely for educational and informational purposes and do not constitute legal or financial
advice. Files, source code, page layout, and design contained herein are the intellectual property of Auto-Loan-Financing.com
and may not be reproduced without the express written consent from Auto-Loan-Financing.com.
The Articles provided are solely for educational and informational purposes and do not constitute legal or financial advice to
erase, fix, or repair bad credit.
