Credit scoring is a system used by a lender, such as a credit institution, bank or lender to check how high a creditworthiness a borrower has.
How does credit scoring work?
It starts with the fact that a private individual or company needs to borrow money and therefore applies for a loan from a bank, sms loan, micro loan, fast loan or other form of loan. The lender then assumes a number of criteria that give different kinds of points depending on the criterion. This collects information about the borrower and then starts by going through the criteria list and publishing scores according to it.
What are the criteria for different credit scores?
The lender sets its own limit on how many points you as a borrower need to reach the lowest limit to be offered a loan and also what criteria you need to meet is up to this person to decide for yourself. Therefore, there may be different requirements with different lenders, so you should not give up just because you are denied at one place or another. The lender may choose to collect information on, for example:
- How much you earn and what assets you have
- Previous payment history
The lender wants to know what you earn and what assets you have to be able to calculate if there is reason to suspect that the borrowed money will not come back. A kind of risk analysis is done with this. The greater the assets or income you have, the more secure you are and receive higher scores in this ranking. Previous payment history is also being investigated for the same reason. Payment notes give lower scores and you are then at a higher risk factor for not being able to repay the borrowed money.
Where and how can I easily apply for a loan?
You can easily do a credit report on yourself before you start your loan application to see what opportunities and opportunities you have. This can be done, for example, at the Information Center or a third party such as Creditsafe and Bisnode. There are also some services online where you can test your credit rating through this score program that many lenders use.
Some lenders issue loans with low requirements or loans to people without a fixed income, and this is possible because this person decides which minimum limit they want to go for. There are also a lot of different types of loans to look more closely at if you are denied a loan from a bank or lender, eg fast loans, microloans and sms loans where you usually have reduced requirements and thus require lower credit scores.
Credit scoring is more or less frequently used also by various players. Smaller lenders who work with fast loans and credit loans, for example, usually have a more demanding credit scoring program to follow and this is then appropriate to use when applying for loans of smaller amounts. If you need to buy a property or for some reason need to apply for a larger amount, you should rather contact a major credit institution or bank. There, they can use credit scoring more diligently and this is a security both for you as a borrower but also for the lender, which gets a better picture of your finances.