What is Credit Scoring?

Credit scoring is a system that money lenders use to assess whether you creditworthy or not. When asking for a financial related product whether is be a loan, bank account or a credit card you will be asked a series of questions which will each score a certain amount of points and will allow the lender to make a decision on the amount they could lend you and over how long.

Once you risk has been calculated, the outcome maybe that the lender decides to change some of the conditions you had originally proposed. This could mean that you appication form is rejected or that the amount lent to you is lower than you need, sometimes the lender may also choose to increase the APR to lessen the risk. Remember that you credit history will be checked before loans are accepted.