Why do Lenders Check Credit Score

Lenders take a calculated risk when they decide to approve a consumer for a loan or credit card. They Check Credit Score on consumers regularly when determining whether or not to approve them for a loan or credit card. A credit score, which appears in the consumer's credit report the lender requests, is an indicator of how much a risk it is to lend money or extend credit to a consumer. A consumer with a low credit score may receive financing, however, that financing may come with very strict terms and a high interest rate. Consumers with a high credit score are often approved for loans and credit cards with the lowest interest rates available and usually great terms.

When lenders Check Credit Score, they are requesting a consumer's entire credit report. The credit report includes the consumer's credit history. The credit report is provided by one of the three major credit bureau reporting agencies: Equifax, TransUnion or Experian. These credit bureaus compile financial information on consumers and to calculate credit scores.

Generally, when a consumer applies for a mortgage, automobile loan, or credit card, the lender may request a copy of their credit report to Check Credit score. The credit report is a detailed accounting of the consumer's credit history and is an indicator of how well a consumer manages their finances. If a consumer has too many late payments or inquiries on their credit report, it could affect the lender's decision to approve a loan or credit application when they Check Credit Score.

A credit score ranges between 500 and 850. When lenders Check Credit Score, the consumer is placed in a specific category depending on their credit risk. Whether or not a consumer is approved for a loan or credit card application depends on which category they fall into. 

500 to 559:   Chances of loan and credit card approval slim; very high interest rate.

560 to 619:   Chances of loan and credit card approval improve; still very high interest rate.

620 to 659:   Loan and credit card approval likely, interest rates generally are not the best.

660 to 669:   Loan and credit card approval likely, better interest rates.

700 to 759:   Loan and credit card approval generally assured, good interest rates.

760 to 850:   Loan and Credit card approval most likely assured, generally the best interest rates on the market.

For more information on how to Check Credit Score and about debt, call NCO Financial Systems, Inc. or visit their consumer website at www.consumerhelpunit.org.

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