 Ever wonder how a creditor decides whether to grant
you credit? For years, creditors have been using credit scoring systems to
determine if you'd be a good risk for credit cards and auto loans. More
recently, credit scoring has been used to help creditors evaluate your
ability to repay home mortgage loans. Here's how credit scoring works in
helping decide who gets credit -- and why.
Credit scoring is based on real data and statistics, so it
usually is more reliable than subjective or judgmental methods. It treats
all applicants objectively. Judgmental methods typically rely on criteria
that are not systematically tested and can vary when applied by different
individuals.
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