How do differing scores affect lending? Let’s say that you are planning to purchase a home and need to apply for a mortgage. If you have a credit score of 720, a lender is more likely to give you a mortgage with lower monthly payments at lower interest rates because the lender knows that your score of 720 reveals that you have paid your debts consistently and on time. Conversely, if your score is 500, it could be that you have a history of missing your monthly payments or have not made your payments on time. This tells the lender that you are a high credit risk. You may still get a loan to purchase your home, but your interest rate and monthly payments will be high, the amount you can borrow may be reduced or you may get turned down altogether.what do differences in assign scores stingy to me?

At present, there are 3 credit reporting agencies; Equifax, Experian and TransUnion. A Lender may inquire about your credit standing from any or all three of these agencies to determine your credit risk level. It is important to note that each of the 3 credit reporting agencies calculates your credit score or FICO score based on five factors and their percentage weight – Payment history (35%); Amount of indebtedness (30%); Length of credit history (15%); New credit (10%); and Types of credit in use (10%). In addition, each of the three agencies collect information from different sources, therefore, your FICO score is not always the same for each agency. Depending on which of the 3 that the Lender obtains information from, will determine whether or not you receive the amount of credit you desire.

These are just some of the possible scenarios resulting from varying credit scores. If you are planning to borrow money, it’s important to know what is on your credit report so that you can make informed borrowing decisions and keep your credit report looking healthy. Remember that a few points can make the difference between obtaining the credit you desire or not.

Even a healthy credit score doesn’t guarantee that you will receive the amount of credit that you are applying for. For instance, you apply for an American Express Platinum member’s card. American Express looks at your credit report and finds that you have a score of 720. A score of 720 is healthy right? The crux is that American Express may have a score requirement of 750 for a Platinum card, in which case, you would only be eligible for a standard member’s line of credit.

Beginning in the 1950’s, the Fair Isaac Corporation or FICO, using a complex calculation, developed a standard to measure the level of risk a borrower posed to a lender in regard to the borrower’s ability to pay back debt. The answer to this complex calculation resolves to a 3 digit number and it is called a credit score. A credit score ranges from 300 to 850. Generally, this means that the lower number, 300, represents high risk lending and the higher number, 850, represents low risk lending.what do differences in assign scores stingy to me?

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