Explanation of the Credit Score

A credit score is a calculation of how likely a person is to pay bills. Higher credit scores enhance a person's chance of credit approval.

Credit Approval

A person seeks credit approval to purchase new items such as cars, homes or credit cards. A high credit score leads to credit approval, lower interest rates, and smaller payment options.

What is the Credit Scoring Process?

A credit score forms from the information lending companies report to credit bureaus. Late payments or failure to make payments cause lending companies to report to credit collection agencies, and the information transfers to an individual's credit report.

Credit Score Models

The credit score models are Equifax, Experian and TransUnion.

Credit Score Range

The credit score number range is 300 to 850. A rate of 720 or higher receives the finest interest rates. A rate of 499 or below receives higher interest rates. Low credit scores often lead to credit rejection.

Achieving High Credit Scores

An individual develops credit by purchasing cars, homes or credit cards. If the individual makes payments in a timely fashion, the credit score grows into a great credit score.

References

• Bank Rate: How Credit Scores Work

Resources

• Experian
• MyFico