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| What is Credit Scoring?
Credit Scoring is a mechanism which helps lenders to extend or not a customers credit. Credit Scoring is one of the methods what helps in decision making. This score is in the range of 300-850, and 850 is the max what a loaner can achieve, thus higher the score the bigger chance the customer has to getting a new loan.
Credit Scoring is calculated by complex algorithms taking in consideration many different variables. The software what's in use works on model prediction. The loaner enters the data, after that the program gives out a number based on statistical data. The credit scoring process can take a long time because there are many variables that can be taken in consideration like: loans, outstanding debts, income, how long the you've been employed in your current job, tax and many others. Of course creditors want to be sure so they use different combinations of these variables. After the program runes his course then the loaner can make an assumption about granting the loan and what type of interest is the best to use. | | | | |
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