Credit Scores

Credit Scores 1

Credit Scores

Marvin Chafin

COM/156

December 12, 2010

Robin Rektor

Credit Scores 2

Credit scores are a fair measure to help lenders estimate potential risk to those who are trying to take out a loan, or apply for credit. For a bank or a credit agency to check on one’s credit worthiness they rely upon three credit score companies. Paying bills on time such as utilities and rent to own helps build your credit score. Not only does this technique show a lender the negative aspects it will also show them the positive attributes. Before credit scores were used all the lender knew was the bad reports on your credit report. As time goes by they are updating the way people are perceived where their credit issues are concerned. Credit scores are a big issue where loans and mortgages are concerned. The higher your score the better your chances are for a loan.

Understanding your credit and the impact that your credit score has on a person's ability to make financial decisions can often come at an expense (Chattanooga Press, 2010). A lot of young adults are unfamiliar with what credit scores mean, they do not realize that their credit is being monitored through a scoring system that will affect them throughout their life. This is not a subject that parents seem to discuss with their children, so therefore it seems foreign to most individuals. It is not uncommon for speakers or even bankers to speak to college students and identifying this issue so that they understand what the FICO scoring system is all about. College students were dumbfounded to credit scores let alone knowing how such credit companies came up with the scores. This is an issue that should be learned at an early age so that even...