What is a credit score?

What is a credit score?

The credit score is a scoring system which is specified as a result of the gathering the needed information on a commonplace and analysis of all credit transactions and movements, that is used through banks, like credit card, consumer loan, and mortgage loan.
What is behind the term credit scoring and why is score value so important in lending? What are the factors that determine this value and how can you influence your personal score?
The credit score represents your creditworthiness. You credit value is very important on this credit system. So the higher credit value means the higher credit rating and thus your chance about the loan will rise up.

How credit scoring works?

With the help of collected data (your previous business relationships with banks, etc.), individual points will be awarded. The numerical value of these points, the credit score, is used to calculate the likelihood that you will repay your loan on time.
However, this score is not the only decisive factor for loan approval. The income and existing collateral, such as property ownership, are other factors that are taken into account. A credit decision is always made on the basis of this overall rating.

What is my credit score?

Scoring procedure on the credit score system
When you make a loan application, the bank first makes a system query. From the system, the bank receives your score values. The system calculates your score from the following data:
Credit activity of the past 12 months and credit usage
Previous payment problems (default of credit installments, unpaid mail-order or mobile bills, etc.)
The length of the credit history (information on how long and at which bank you have checking accounts and credit cards)

What’s the highest credit score?

From this data, a score for banks and savings banks, telecommunications companies, mortgage business, shipping and internet trading is calculated.

What is a perfect credit score?

Perfect credit score means it is over %90 percentage on the credit scoring system but still, you may have some serious problems on the credit calculating. A percentage of 50 to 80 means very high risk, less than 50 percent a very critical risk. Only from a score value of 95 percent, the risk of possible insolvency is considered low. 90 percent is still considered satisfactory and that means your chance is still good on the calculating.

 

FinanceMeaning.net

User Rating: 5 ( 1 votes)
Tags

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close