How does credit scoring work?

Question

Am i right in thinking that you start with 1000 points then goes down if you dont keep up repayments and anyone know what your score has to be to get a decent rate for a loan from your bank? thanks

Answer 1

Credit Score is calculated based on your credit history to give lenders a simpler "lend/don't lend" answer for people who are applying for credit or loans. The system awards points based on information in the credit report, and the resulting score is compared to that of other consumers with similar profiles. With this information, lenders can predict how likely someone is to repay a loan and make payments on time.

Although there are several scoring methods, the score most commonly used by lenders is known as a FICO because of its origins with Fair Isaac and Company. Fair Isaac is an independent company that came up with the scoring method and software used by banks and lenders, insurers and other businesses.

Answer 2

No not exactly. You are right that your score goes up and down depending on your conduct. However, you don't start off with a score then lose points. People with no credit histories tend to have a low score because there is no history for the bank or lender to go on.

There are several companies you can get your own credit file and a guide to your credit rating from. Credit Expert from Experian is a very good one because Experian is one of the leading credit reference agencies in the UK and they're giving a free 30-day trial here: http://www.anrdoezrs.net/click-2294922-10368746

Answer 3

Speaking as someone who underwrites loans, credit cards etc for a major bank we do not look at anyone's score. It all depends on the information you supply. A major reason people struggle to get credit is simply because they are not registered to vote which a key tool we use.

If you have no credit history at all you will not get the best rates and so on so start with 1 credit card with a company that guarantees acceptance.

You will be given a very small credit but it allows you the opportunity to build your credit rating by making regular payments on time and by staying within your limit. To start off with only use the card if you are going to pay it off in full in each. This will work wonders on your credit rating and within 12-18 months your credit rating will be great.

Answer 4

Each financial institution uses a different credit scoring method.
I doubt that you start with 1000 points - my Norwegian friend had serious problems getting a loan due to a lack of credit history in the UK, so you probably start with 0 if anything.
You can contact Equifax or Experian to find your credit history, but they do not score you in any way, they just provide data on your payment history, loans etc, to credit card providers etc.
You will be able to get an idea from your file of whether your history is good or bad, but it is not possible to get any kind of score.
However, if you are having trouble getting a loan, you can at least see and correct any errors.

Answer 5

Credit scoring is a technique which most lenders use to assess your creditworthiness. It uses tried and tested methods to predict whether or not you are likely to repay a debt. The information on your credit report and the information you provide on an application form to a shop or lender can be used to build a credit score. This is a rating that can be used to identify the risk in offering you credit.It doesn't start at a 1000 points at all

Answer 6

I bought a set of programs that showed me how to read my credit report and what everything means. Then the programs showed me how I could improve my credit by doing certain things. It has brought my credit score up to now I can have anything on credit and get really great loans. I have a friend who just bought a car using these programs and they saved him thousands of dollars just by knowing what to expect and what not to get when buying a car. I love these programs. Check them out at http://www.comingbackstrongfinancially dot com see what you think. To me they are worth the money. Believe me

Answer 7

35%---payment history
30%--amount owed
15%--length of credit history (how long you had the credit card...that's why it's not a good idea to cancel or close credit card accounts
10%--new credit (your FICOs go down if you just got a new credit card...but it goes but up if you pay your bills on time
10---types of credit used (revolving credit cards, loans, mortgages, auto loans

FICOs 650-720 are good, 720+ will give you the best interest rates for cars and so forth