Why Aren’t Credit Scores Explained To The Customer
Posted at by ifydcat on category CreditAnyone who has ever tried to get a loan for an automobile or home has probably been told what his or her FICO rating was. But they may have never had their credit scores explained to them. This can cause a lot of confusion for someone who does not know what it means.
Ranking is based on an individual’s money management skills. It is a equation that is used to figure how much a person owes in debt, if they can any available spending lines, and how the compare to others throughout the country. Once the number is figured, it is what tells lenders what kind of risk they are.
These rankings can run anywhere from 300 to 850 points depending on the factors on their individual files. The higher a person ranks the better rates they will get on a loan. If the ranking is below 620, then chances are they will be paying a lot more on their payments if they get the money at all.
The idea behind this type of profiling is that those that have a higher ranking will be able to get more desirable rates. It is supposed to tell the lenders how well the individual took care of their money. When the risks are lower for the lender, they are more likely to loan the money.
Unfortunately, this has not really happened. While the plan was a good one, it doesn’t seem that those that should benefit the most have been. It only gives lenders the numbers, and many times this does not give the whole story which could be helpful in making a decision.
However, there have been a lot of complaints about this form of rankings. Because of this more lenders are trying to help get credit scores explained to their customers. Each lender can view a person a little differently.
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