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Credit
Score
Credit
accounts - especially FICO ® accounts, the accounts most widely
used credit bureau - have carried out major improvements in the credit
process. Because
credit accounts: People can get loans faster. The
accounts can be delivered almost instantaneously, helping lenders speed
up loan approvals. Many
credit decisions can be taken today within minutes. Even
a mortgage application can be approved in hours instead of weeks for
borrowers who score above a lender 's "shortcut from the account." Scoring
also allows retail stores, Internet sites and other lenders make
decisions of "instant credit". Credit
decisions are fairer. Using
credit scoring, lenders can focus only on the facts related to credit
risk, rather than their personal feelings. Factors
like gender, race, religion, nationality and marital status is not
considered in credit scoring. Credit
"mistakes" count for less.
If
you have had poor credit performance in the past, credit doesn
'scoring, t let him forever haunts. The
recent credit problems fade with time and as recent good payment
patterns appear in your credit report. Unlike
so-called "knock out rules" these borrowers rejected based solely on a
past problem in their file, credit scoring weighs all credit-related
information, good and bad, in your credit report. More credit is
available. Lenders
who use credit scoring can approve more loans because credit scoring
gives more accurate information on which to base credit decisions. It
allows lenders to identify individuals who are likely to perform well
in the future, but your credit report shows past problems. Even
people whose scores are lower than a lender 's shortcut for the benefit
of the "automatic approval" score. Many
lenders offer a choice of credit products geared to different levels of
risk. Most
have their own separate guidelines, so if one lender turns you down,
others can approve your loan.
The
use of credit scores gives lenders the confidence to offer credit to
more people, since they have a better understanding of risk they are
taking on. Credit
rates are lower overall.With
more credit available, the cost of credit for borrowers decreases. Automated
processes the credit, including credit scoring, make the credit
granting process more efficient and less costly for lenders, which in
turn have passed savings on to their customers. And
by controlling credit losses using scoring, lenders can make an overall
lower rates. Mortgage
rates are lower in the U.S. than in Europe, for example, partly because
of information - including credit scores - available to lenders here. Knowing
and improving their own can also lead to more favorable interest rates |
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