Finance What is a credit score

Setho

VIP Contributor
I have a lot of friends who have wanted to create one form of business or the other but had problems with generating funding. The approved banks and other financial institutions for loans or grants and they were turned back on the basis that they do not have a good credit score so I will want to know what is this credit score and how important is it to acquiring loans?
 

arunima25

Verified member
A credit score is a number that is an indication of your credit worthiness. You score a number based on your personal financial data. That would include a lot of factors that decide your credit score..your debt to income ratio, your punctuality with the payment of your debts and credit card bills etc are few factors that decide your credit score. Any lender for loan checks for your credit score before lending you a loan. The higher your credit score, the better it is considered. If you have a low and poor credit score, banks and other financial institutions do not accept your loan request. They find a risk that their loan might not be paid back and they do not want to fall for loan fraud. So, they do a thorough background checking and your credit score weighs a lot there.
 

Mika

VIP Contributor
A credit score tries to analyzes your creditworthiness in terms of loan eligibility. Well, there might be other implications of credit score but this one is the most obvious one. You get a credit score by analyzing your debt, existing loan, your total expenses, etc. in relation to your total income you generate per month.
 

arunima25

Verified member
A credit score tries to analyzes your creditworthiness in terms of loan eligibility. Well, there might be other implications of credit score but this one is the most obvious one. You get a credit score by analyzing your debt, existing loan, your total expenses, etc. in relation to your total income you generate per month.
You are right. There are many other implications of credit score other than loan eligibility. In countries like the US, you get numerous advantages if you maintain a good credit score. Also, credit score checking is a part of every background check up whether you want to rent a place to live or for business, you apply for a new job. It becomes very important to maintain a good credit score there.
 

Alexandoy

VIP Contributor
I used to work in the bank but I had never encountered the term credit score. What banks require is the capacity to pay aside from the willingness to pay. The capacity is based on all the income that the applicant has. The willingness is to check the credit card providers if the applicant has a bad debt. Other than that I mentioned I don’t know of the credit score here.
 

arunima25

Verified member
I used to work in the bank but I had never encountered the term credit score. What banks require is the capacity to pay aside from the willingness to pay. The capacity is based on all the income that the applicant has. The willingness is to check the credit card providers if the applicant has a bad debt. Other than that I mentioned I don’t know of the credit score here.
I think what you check from the credit card providers is the credit score. That is the technical term.
One can go seeking a loan from a bank without having a credit card too. But then it involves a different set of background check-up and requirements. They check for your other assets to see your financial capacity to pay back the loan or something the bank can take in case of loan default. It is easier to get a loan against your credit card if one has a good credit score.
 

krivathakkar

New member
A credit score is a number that ranges from 300 to 850 and represents a person's creditworthiness. A borrower's credit score improves the way he or she appears to potential lenders. So, if you are planning to get a business loan, your credit score is calculated using information from your credit history, such as the number of accounts you have open, the total amount of debt you owe, and your repayment history, among other things. Credit scores are used by lenders to assess the likelihood of a borrower repaying a loan on time. While some fintech organizations like Lendingkart provide loans even for people with a low credit score.
 

Mandy96

Valued Contributor
Credit score is being used in the United States of America, it has a lot of advantages, a USA citizen with good or high credit score can easily get a loan without the need of collateral from banks, online and other means of getting it. This is also used to be able to offer a credit card which is basically made for quick or instant loan without having to write or set up an application before given the loan. It has many other advantages that can’t be mentioned, one can even use it electronics in credit and also gadgets like phones, laptops and so on.
 

Jasmine

VIP Contributor
Your credit score is a score that determines your financial fitness. Generally speaking, credit score is used to check whether you are eligible for getting a bank loan or a credit card.You get your credit score by tallying your total income and total expenses. Good credit score will ensure that you can pay back your loan.
 

Yusra3

VIP Contributor
A credit score is a three-digit number that summarizes an individual's creditworthiness based on their credit history. Calculated by credit bureaus using details in credit reports, it represents the likelihood of repaying debts on time. Credit scores typically range from 300-850, with higher scores indicating lower credit risk to lenders. Key factors impacting scores include payment history, amounts owed, length of credit history, credit mix, and new credit inquiries. Lenders use credit scores to evaluate applicants' eligibility and interest rates for loans, credit cards, mortgages, and other financing.
 
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