Effects of Credit Scoring

Effects of Scoring

Your credit score doesn't just affect whether or not you get a loan; it also affects how much your going to be paying for it. As your credit score increases, your credit risk decreases. The better your credit is, the lower your interest is.

There are other factors that influence the interest rate you get for a loan besides your credit score. Things like the type of property you are using the loan to buy, how much of your own money (equity) is going into it, the costs the lender has to make the loan, etc.

In addition to banks and lenders, there are landlords, merchants and insurance companies all interested in your credit score. Even insurance rates are being determined by credit scores! To most, it seems that your credit history and your driving record have little in common. Insurers, on the other hand, have found that using credit scores to predict how likely someone is to pay premiums has helped them cut their losses. They don't use the same score that banks and lenders use, however. They use a slightly different formula for their calculations and actually call it an "insurance score."
Insurers' use of credit histories to determine rates is under scrutiny nationwide. Many states are passing laws restricting this practice.

This site provides only general information. It is not intended to, nor should it be taken to be, legal, financial or other professional advice. Do not use is as such. Always consult with your attorney or financial advisor to discuss all legal or financial issues involved with credit and debt management solutions and issues.