Why you need to know credit score
If a person will apply for a loan or a credit card account in the United States, the financial institutions will look at the person’s credit score. The credit score is simply a numerical expression that is based on the statistical analysis of a person’s credit files that will represent the creditworthiness of the person. The score is primarily based on the credit report information as provided by the credit bureaus. The person’s creditworthiness is the likelihood that the person will pay their bills. The score is primarily based on the credit information report that can be provided by three major credit bureaus which include Experian, TransUnion and Equifax.
Lenders like banks and credit card companies use the credit score to evaluate the risk posed by lending money to its consumers and also to mitigate bad debt. The score is used to determine who will qualify for the loan at what interest rate and at what credit limit. The use of scoring as a way to determine the creditworthiness of one person is not limited to banks and financial institutions. Other companies and organizations like mobile phone companies, insurance companies, employers and government departments also employ some form of scoring to check if the consumer is worthy of the service or product. The three main credit bureaus worked to offer one single credit called VantageScore. The VantageScore uses a scale and credit score range from 501 to 990. People with credit scores of 501 to 600 are considered s high risk borrowers while borrowers with scores that range from 901 to 990 as super prime borrowers. So what does this means to the regular shopper and businessman? Well for the businessmen, it is imperative that he gets the better credit score so that he will be regarded in a better light by the banks and financial institutions.
