by Credit Scores range from 300 (very poor) to 850 (excellent).
Credit Scores alone DO NOT determine whether or not a person will be approved or rejected for the type of credit that they seek (though this may be the case).
Rather, Credit Scores are used by Lenders to evaluate a person’s creditworthiness, which in turn, determines the amount of credit to be extended and determines the interest rate to be charged.
In other words, your creditworthiness tells the Lender how much risk they are going to take by approving your credit application and what are the odds that you will repay the credit offer?
In a nutshell, your Credit Score reveals your creditworthiness to the Lender.
Generally, if a person has a Credit Score below 640, they would be considered a subprime borrower.
A subprime borrower is considered a HIGH-CREDIT-RISK and as such may be charged a higher interest rate for obtaining a credit card with a low credit limit.
Subprime borrowers may not get as much time to repay a car loan or a mortgage, and/or may require a cosigner to qualify for a loan, or may need to pledge some type of collateral against the loan.
On the other hand, generally, if a person has a Credit Score of 700 or above, this type of person is considered a LOW-CREDIT-RISK and may be eligible for a low interest rate credit card with a high spending limit and may receive more time to repay an auto loan, a mortgage, or a line-of-credit, and may even be eligible for a low interest loan by simply providing a signature.
Credit Scores are very fluid, therefore, creditors and lenders check and review borrowers Credit Scores periodically.
Based on the direction of a borrowers Credit Score (up or down), may cause the Lender to increase or lower the interest rate on a credit card, increase or lower credit card limits, increase or restrict future credit offerings.
Also, your Credit Score may determine how much of a deposit you might need for certain important services, like activating a cell phone, switching on home utilities, obtaining auto and home insurance, or to rent an apartment.
Goodwill Credit can help turn your bad credit into good credit and make your good credit even better. SUBSCRIBE NOW.
