Consumer Information:
Credit Scores

What is a credit score, and what does it mean to you?

The information below is provided as a public service from Debt-Tips.com. All of the information comes from various organizations, U.S. government agencies and departments. As a consumer, you owe it to yourself to know as much as possible about debt, credit, taxes, mortgages, banking – and avoiding related scams.

The information on this page involves credit scoring. The higher your credit score, the better. Many factors affect your credit score – including the amount of debt you have, your prior payment history, and the number of accounts you have.

Your credit score will affect the amount of money others will loan you, the interest rate you will receive, and your ability to borrow money. So, it is a good idea to keep track of your credit history, and you won’t be surprised next time you go to borrow money:

Scoring For Credit

How does a creditor decide whether to lend you money for such things as a new car or a home mortgage? Many creditors use a system called "credit scoring" to determine whether you are a good credit risk. Based on how well you score, a creditor may decide to extend credit to you or turn you down. The following questions and answers may help you understand who gets credit, and why.

What Is Credit Scoring?

Credit scoring is a system used by some creditors to determine whether to give you a loan or credit card. The creditor may examine your past credit history to evaluate how promptly you pay your bills and look at other factors as well, such as the amount of your income, whether you own a home, and how many years you have worked at your job. A credit scoring system awards points for each factor that the creditor considers important. Creditors generally offer credit to those consumers awarded the most points because those points help predict who is most likely to pay back the debt.

Read the entire article: Scoring For Credit

From: "Scoring For Credit". accessIndiana: The Official Web Portal for the State of Indiana. 2/9/05. State of Indiana. http://www.in.gov/dfi/education/crscore.htm

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