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How Does a Creditor Determine Whether to Grant You
Credit?
Credit 101
How does a creditor determine whether to grant you credit? For
many years, creditors have been using credit scores and credit
scoring systems to determine if you'd be a good risk for a loan
or credit card. More recently, credit scores have been used to
help determine what rates you pay for insurance. What is a credit
score and why is it so important?
What is a credit score?
Credit scores and credit scoring systems are used to help
creditors evaluate the risks associated with granting loans and
extending credit. Everyone has a credit score. Information about
you and how you have handled your credit is captured onto a
credit report. How you have paid your bills, the number and type
of account you have, late payments, collection actions,
outstanding debt, and the age of your accounts, is collected from
your credit application and your credit report. Using a system,
creditors are able to compare all of this data against the credit
performance of other consumers with similar profiles. A credit
scoring system assigns a point value for each factor and helps
predict who is most likely to repay a debt. The total number of
points is combined to form your credit score. Your credit score
predicts your creditworthiness or the probability that you will
repay a loan / credit in a timely fashion. The higher the credit
score, the lower the risk associated with extending loans and
credit. The lower the credit score, the higher the risk
associates with extending loans and credit.
Because credit reports and credit scores are so important in
today financial world, it is imperative that you monitor these
closely. I recommend that you contact the three major credit
bureaus to obtain a copy of your credit report at a minimum of
every 90 days. To obtain a copy of your credit report
contact:
Equifax: (800) 685-1111
Experian (formerly TRW): (888) EXPERIAN (397-3742)
Trans Union: (800) 916-8800
Just as there are three major credit bureaus, there are three
separate credit scores provided by each of them. All of these
scores are developed utilizing a method Fair Issac came up with
to ensure that an accurate picture of our credit risk is
generated. Each score may vary slightly, as the information
contain on each credit report from each of the three major credit
bureaus is different.
When lenders and financial institutions evaluate your credit
report and credit scores, they use information provided by these
three major credit bureaus. It is imperative that you monitor
these credit reports, as your financial future is contain on
those pages. There are rights afford to each of us as consumers
by law, which allow us to ensure that the information contained
on these reports are accurate With the Federal Bureau of
Investigation naming "IDENTITY THEFT" as the number one crime, it
is imperative to maintain your credit profile in today's world.
Don't let a theif steal you and your families financial
futures!
For more information regarding your credit scores, credit
reports or debt options currently available to you, please
contact Gateway Credit Connection or visit us online at
www.creditmonkey.com.
Michael Goff is the Co-Founder of Gateway Credit Connection,
helping empower consumers to take control of their personal and
business finances.
Gateway Credit Connection
15770 Dallas Parkway
Suite 1100
Dallas, TX 75248
469.547.4323
Visit us online at http://www.CreditMonkey.com
MORE RESOURCES:
Credit - Google News
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