Feb 16 2010
Credit Score: What is it? Part 1 of Credit 101 Series
There is a lot of misinformation out there about what a credit score really is. Simply put – a credit score is a 3 digit number that seeks to quantify how likely a borrower is going to be 90 days late on a payment. Why 90 days? At 90 days, lenders spend more to maintain the account. Calls increase, increased notices go out, the lender may turn the file over to another department or collection company.
Each score is specific to each bureau. The score is generated by analyzing the information in the consumer’s credit report at THAT particular point in time. The higher the score the less the odds of default. For instance statistically, a consumer with a credit score of 800 and above has a 1292 t0 1 chance of becoming 90 days late while a consumer with a credit score between 620 to 659 has a 38 to 1 chance of being 90 days late.
Your credit score is more important than ever. When it comes to credit what you do not know can cost you big. Stay tuned for more Credit 101.
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