A credit score is a number lenders use to help them decide : "If I give this person a loan , will I get paid back on time?" It is one of several pieces of information that mortgage lenders use when evaluating your application for credit.
There are different types of credit scores. Credit bureau scores are based solely on information in consumer credit reports. Other types of scores may also include information from credit applications or bank files. A credit score is calculated by a computer in your bank or at one of the national credit bureaus when a lender requests it.
A score is a snapshot of your credit risk picture at a particular point in time. It changes as new information is added to you credit bureau report or bank file. Only information that is proven to be predictive of future credit performance is used.
Credit scores give lenders a fast, objective measurement of an applicant's credit risk. Before the use of scoring, the credit granting process was usually slow, inconsistent and often unfairly biased.
Lenders can use scores to speed up loan approvals to borrowers who score above a certain threshold. Borrowers with scores just at the threshold or below may be asked to submit additional information or may qualify for different terms. Many lenders offer a choice of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan.
A "good" score is a number that matches the level of risk a lender is willing to accept for a particular loan or credit card. For example, a score of 750 may qualify you for a gold credit card, while a score of 675 may indicate you're a better match for a standard card. Scoring systems have varying numerical scales. A score of 875 could indicate high risk in one system and low risk in another. It's hard to say what's a good score to get - it varies from lender to lender.
Some lenders may tell you your score. However, a score in isolation does not provide much information. Scores are dynamic and change when new information is added to the credit file. Also, lenders use different types of scores with varying numberic scales. In addition, other factors, like application information, inpact