What is a credit score
While a credit report can be considered your detailed financial history, a score is an objective summary of that information. It represents your creditworthiness as a number. Numerical weights are placed on different aspects of your credit report and a mathematical formula or computation is used to arrive at a final score. There are literally thousands of score models used in the credit industry which consider different variables for different types of credit. Credit bureaus offer several different types of scores in their product portfolio, appealing to the vast array of creditors and credit applications in the country.
How are credit scores used
Credit scores are one of the primary tools a creditor uses when determining the risk in lending money to you. Creditors use scores, among other things, to determine whether or not to grant you credit and, if so, how much credit and at what rate. Creditors will also access and consider your credit report, which can provide further substantiation on a given component of a score that could affect their final decision. However, as most credit decisions are made very quickly, it is a credit score that is most often used.
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