When you are looking for new or used ar finance deals, it’s always beneficial to know what your credit score is, and how your credit score is determined. The best deals go to those of us with the best credit scores.
While many of you might have already accessed your credit file, you may still be interested as to how your credit score is determined.
The Maths of It
For a credit check, every individual begins with a score that is known as a constant. Depending on the variables then being applied to the credit check, the score will adjust depending on how each applicant performs against these.
For example, a positive outcome against a variable will lead to an increase in the credit score, while a negative outcome will lead to a decrease. The sum total of all these variables is what then delivers the final credit score.
It is worth noting that not everything will add a significant number of points to a credit score. For example, if you didn’t have any court judgments on your credit file, this wouldn’t increase your credit score massively, but if you did have a court judgment, this would definitely reduce it to a significant degree.
Credit Score Calculation
Your credit score is calculated using the information on your credit report and there are a number of factors that take into account your risk as a borrower. These include:
You should note that different lenders and credit providers will have different criteria and policies that determine who they lend credit to. Consequently, while your credit score can help you to make a decision around whether to apply for credit, it is not a definitive guide as to whether you will be successful.
Likewise, the different criteria and policies used means that while one credit provider may reject an application, another may accept it. A good Finance broker will be able to assess which lenders to approach for your loan application.
-----It can be intimating and confusing applying for a loan and understanding your credit score.
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