Edge of Bankruptcy

Submit Enquiry




Enquiry Type


Enter Code:

How Does a Credit Score Work?

When you fill out an application for a mortgage, car loan or even a credit card, lenders will consult your credit score to determine whether you are an acceptable risk. While this may sound harsh and uncaring, the premise behind a credit score is to help place all borrowers on equal footing using a broad sampling to determine proper credit risk.

Determining Factors

Credit scoring models use several methods of determining your ability to repay a loan. The first method is timely bill payment. If you are late or delinquent in bill paying it affects your credit score.

Companies extending credit will also look for those who have an established credit history. If you have little credit history to draw from there may also be a reduction in your credit score.

Having significant outstanding debt can have a negative effect on your credit score. If you have a credit card that is nearly maxed out, your credit score may be reduced.

Companies may look to see how long it has been since you last applied for new credit. If you routinely apply for credit it can also be factored into credit scores.

Multiple credit card accounts can also provide a negative impact on your credit score. Loans from a finance company may also be viewed negatively in conjunction with your credit score.

Other Factors to be Considered

There are several additional variables that are considered in arriving at your individual credit score. These can include such things as length of employment, home ownership and type of job you currently have.

The higher your credit score the better chance you have of being granted credit that includes lower interest and better terms.

Should your credit score be border line, an application will generally be reviewed by a personal loan officer for final determination.

If Your Loan is Not Approved

If you are denied because your credit score is too low, you have the right to ask specifically why the credit was not approved. Companies that specialize in loans are required by law to provide specific details regarding loan denial.

JP Burkhart recommends that you visit how does a credit score work for more information.This article is free for republishing
Source: http://www.articlealley.com/article_43054_19.html

Don't Miss...
  1. Arrange Finance for Business with Secured Business Loans
  2. Small Business Loans: An Opportunity To Prosper
  3. Ease Yourself or Finances with Low Cost Secured Loans
  4. Commercial Bridging Loans are Available for Bad Debtors Also
  5. Corporate Loans - Funding Industrial Growth
  6. Unsecured Loans – loan for any borrower
  7. Secured Loans- Benefiting the borrowers in manifold ways
  8. Borrowers Confused About Their Mortgage Options
  9. Bad Credit Unsecured Loans: Financial Relief For Borrowers
  10. Bad Credit Loans: Approval Made Easy For Borrowers
  11. No Credit Check Personal Loans: Personal loans for bad credit history borrowers
  12. Loans For Bad Credit: Feasible Finances Towards Bad Credit Borrowers
  13. Unsecured Loans: Asset-Free Money Available To Borrowers
  14. Why Are Cash Loans Now Popular With Borrowers?
  15. Personal Loans: Available To All Kinds Of Borrowers
  16. No Credit Check Loans: Easy Money For Needs Of Borrowers
  17. Unsecured Loans: Risk-Free Opportunity For Borrowers
  18. Private Student Loans Can Supplement Federal Aid, Help Borrowers
  19. First Choice For Many A Borrowers - Secured Loans UK
  20. Secured Loans for Homeowners: The Best Choice For Borrowers
  21. Cheap Payday Loans are Available For Bad Credit Borrowers
  22. No Credit Check Personal Loans: Personal loans for bad credit history borrowers
  23. Unsecured Loans: An Ideal Financial Assistance For All Borrowers
  24. Debt Consolidation Loans are Available for Bad Credit Borrowers
  25. Bad Credit Unsecured Loans: The Best Financial Solution For Bad Credit Borrowers
  26. Personal Loans: Making It Easy For Borrowers To Fulfill Needs
  27. Various Purposes Can Be Fulfilled With Secured Loans
  28. Are Personal Loans Right Choices For Bad Credit Debt Borrowers?
  29. Personal Loans: A Benefactor At Personal Level
  30. Secured Loans With Low Interest and Easy Repayment Are The Best Option For Borrowers
  1. Five Ways To Improve Your FICO Credit Score, Get Lower California Mortgage Rate.
  2. Unimpressive to Impressive Credit Score through Bad Credit Loan
  3. The Credit Bureaus New "Vantage" Credit Score. (Their "Ad"Vantage or ours?)
  4. Bad Credit Secured Loan for your Better Credit Score
  5. Fixing Your Credit Score Doesn't Have to Cost You Credit repair
  6. Credit Card Surfing 101 and How it Can Affect Your Credit Score
  7. Credit Score Basics and the New Credit Score System
  8. How to Check and Interpret Your Credit Score
  9. Save Time, Money, and Frustration and Get the Right Credit Score
  10. Credit Repair for Credit Scores

© Edge of Bankruptcy 2008. All Rights Reserved