A credit score is a number that is assigned to you, based on your payment and debt history. This number is used to determine your eligibility for loans, credit cards, mortgages, etc. Lenders need to know what kind of risk they are facing when lending you the money you need, for the life that you want. Your credit score indicates how much of a risk you are to these lenders.
The most widely used credit scores are FICO® Scores, the credit scores created by Fair Isaac Corporation. 90% of top lenders use FICO® Scores to help them make billions of credit-related decisions every year. FICO® Scores are calculated based solely on information in consumer credit reports maintained at the credit reporting agencies.
By comparing this information to the patterns in hundreds of thousands of past credit reports, FICO® Scores estimate your level of future credit risk.
It’s important to know that each lender has its own strategy, when deciding who they consider a risk or not. This means, that there is usually no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.
Now, credit reporting agencies cannot just assign any number they want to people, without reason. When a FICO® Score is calculated from your credit report, the credit reporting agency will also provide up to five reasons that are most heavily influencing that particular score.
You really can’t blame a lender for wanting a high credit score before allowing you to borrow money. CreditLawPro.com is here to help you make a better name for yourself, in this game called life.