They want to recover the cash they lent you - with interest. The risk that you simply won’t repay your loans is called your credit risk. For obvious reasons, lenders don’t like borrowers with elevated credit risk. To assess your own personal credit risk, lenders depend upon three-digit credit ratings.
] or another sources down the page) is dependant on the information incorporated into your credit file, an extensive look at your recent financial history. Credit reports include data on past loan repayments (including late or delinquent payments), bankruptcies, foreclosures, credit utilization, credit applications, plus more. In the United States, most credit rating reports are issued by several major canceling bureaus: Experian, TransUnion, and Equifax. Keep in mind that although your credit ranking is derived from the knowledge in your credit score and history, these are two separate things.
Most credit ratings . follow a scale starting from 300 (riskiest) to 850 (least risky), though you can find exceptions. The most popular methodology was devised by FICO - you’ve probably heard mention of your “FICO score,” though it’s donrrrt forget this that the FICO methodology enable you to interpret credit history from any of these major bureaus.
Lenders often segment score ranges into quality classifications, for example “A,” “B,” and “C,” or draw a line separating “prime” and “subprime” borrowers with a particular score - usually between 600 and 650, according to the lender. Since each bureau’s report contains slightly different information during a period, a credit worthiness based on your Experian report, one example is, probably will vary somewhat from the score according to your Equifax report.
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