Posted in Finance, Accounting and Economics Terms, Total Reads: 316
Definition: Credit Store
Credit Score is a numerical value that is generated for each person or any other entity that depicts the entity’s creditworthyness. It helps the banks or other lending institutions to analyze the likelihood of the borrower to pay back the debt that he or she intends to take. It takes into account the credit history of the borrower’s previous credit defaults to quantify the risk taken by the lending institutes.
The interest rates offered by the banks change for each borrower depending on his or her creditworthyness. A person with a high credit score might be charged an interest rate lower that the person with a lower credit score. The credit score ranges between 300 and 850 with a higher value being an indication of lower risk for the lender. Credit score is a subjective analysis and hence the same individual or organization can be given different credit scores by different credit rating agencies.
Some of the factors that help determining the credit score are: