For years, creditors have been using credit scoring systems to determine if you'd be a
good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans. Here's how credit scoring works in helping decide who gets credit -- and why.
What is credit scoring?
Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts 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 statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points -- a credit score -- helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.
There is a movement now to full disclosure
to consumers that will allow you to see your scores and how they are
calculated. This has not been passed into law as of this date.
for a free copy of
your credit report right now,
The steps outlined on this page should
improve your credit files and credit scores and enable you to qualify for more favorable terms.
strongly suggest You monitor Your Credit Files To Make Sure The Inaccurate Information Does Not Reappear, Especially After All of the hard work you have
done to rebuild your credit.
to start monitoring your credit report right now,
Inaccuracies in Credit Reports
Fair Credit Reporting Act * FCRA
steps required to restoring your good credit
a copy of your credit report
Your Credit Report for Inaccuracies
Agencies and your credit file
to settle a debt and negotiate a settlement
your credit rating
Consolidation Loans for Home Owners