Credit Scoring and Its Impact

Masters
Essay
Miscellaneous
Pages 18 (4518 words)
Download 0
A credit score refers to a statistically based means of evaluating the expected repayment performance of a loan that can substantially decrease the time cost of reviewing applications, and human input.1 It is a three-digit number based on a borrower's bill-paying history and debt profile…

Introduction

It has an important influence on the interest rate incorporated to the borrowed money. With the significance of credit score, knowing it enables an individual to question the accuracy of the score, and as a result, negotiates the best rates with lenders. A credit score is purchased separately and is not a part of a consumer credit report. One may purchase a credit score from a consumer credit reporting agency, who can charge him/her with a reasonable fee.4
Credit scores are used other than determining whether a person will default on a loan or make late payments. Low credit scores are used by usurers in order to identify individuals whom they believe are likely to make claims on their insurance policies. An accurate credit score can enable interest rates be charged on loans and can make a difference on the availability and cost of insurance.5
Mathematics models are used in calculating credit score, which analyzes the creditworthiness of a person. The amount and types of debt that a person owes are considered by the models. The person's repayment history will then be analyzed alongside thousands of other consumers in the credit store. ...
Download paper
Not exactly what you need?

Related papers

Increasing technology and its impact on children
When quantified, however, technology benefits seem to surpass supposed destructive effects on children's development - with some caution on use. For example, immediately following are reports from research detailing negative effects on children, after which the positives follow.…
Climate Change and Its Impact on Health
Solar radiation powers the climate system. Here we are trying to explain the factors, which are affecting our climate change, and how the human activities are affecting the climate mostly in negative way. Further we will try to understand how the global warming the most visible aspect of climate change affects our whole climate system including humans worldwide. Finally we will discuss the ill…
Credit Risk Models in Financial Institutions
The most critical factor that affects the 3Cs of a bank is 'Credit Risk'.…
Differences in Assessing and Managing Credit Risk in Investment Banking and Commercial Banking
Investment banking is one of the rapidly increasing financial businesses globally and global investment banking revenue increased concecutively for the third year running in 2005, to $52.8bn.…
Impact of US Credit Crunch on Global Economy
Lenders were also looking for borrowers even with lesser creditworthiness but new house buyers. Interest rate was already slashed from 5% to 0.75% in 11 installments. They were ready with exotic offers such as 'interest only' loans or 'option adjustable rate' mortgage (option ARMs). These loans were attractive because of low down payment but later the payment was to skyrocket. Banks wrote in…
Credit Scoring and Its Impact
It has an important influence on the interest rate incorporated to the borrowed money. With the significance of credit score, knowing it enables an individual to question the accuracy of the score, and as a result, negotiates the best rates with lenders. A credit score is purchased separately and is not a part of a consumer credit report. One may purchase a credit score from a consumer credit…
Television and its Impact on Teenagers
Television sells, and it not only sells advertising, it sells ideas. The teenage mind is at a stage where it is open to new ideas, experimentation, and is easily swayed by a sense of status through images. Teenagers, often alienated by their parents and the educational system, seek an identity and want to be a part of a reference or in-group. Teenagers will copy what they view on television and…