- The
credit score is an indication of the type of credit risk as seen by a potential
credit lender. A credit score is a number lenders use to help them determine how
likely it is that a borrower will repay the loan in a timely manner. Lenders use
scores, among other things, to determine whether or not to grant you credit and,
if so, how much credit and at what interest rate.
The higher the score, the less risk. Find out how you score!
- Lenders use
credit scores to approve or deny prospective borrowers and set interest rates.
Borrowers typically are hit with higher borrowing costs if they have less-than-stellar
credit and are making a low down payment, among other factors.
- Your
credit score is calculated based on the following criteria:
35% - Payment History
30% - Debt-to-Credit Ratios
15% - Credit History
10% - Type of Credit and
10% - Number of Credit Inquiries
- Borrowers can obtain the best interest rates by making timely
payments, maintaining low balances, leaving old accounts open, and applying for
credit only when necessary.
What is your credit score? Find out NOW!
Source: Investor's Business Daily (01/05/04); Katzeff, Paul.
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