What is a credit score? You have probably been seeing it on the news or from CIBI’s social media pages and wonder what credit score is really about and why should it matter to you?
A credit score is a 3-digit number that predicts your likelihood of paying a loan. Lenders use the credit scores to determine if Juan Dela Cruz qualifies for a loan, or what interest rate or credit limit to give depending on his potential risk.
Below is an informational video developed by CIBI Information, Inc. under its credit education campaign called #CIBIInfoInk.
Just like a test score, a teacher would instantly know if you have passed or you may need to improve more on your exams. If a test score sums up how many right answers you have on the test questionnaire, a credit score is calculated using a special algorithm that considers your history of payments, how much debt you used, the length of your exposure to credit, how many accounts you recently opened and what other credit types you have as a borrower.
Clearly, a credit score assess all the vital areas in understanding your creditworthiness. Credit score is a quick and accurate method used by lenders worldwide for more than three decades.
Credit score ranges from 300-850, with 850 as the highest. The higher the score, the more an individual will be entitled for a good interest rate or better credit services. If we have been asking why most of the individuals from advance countries can easily buy cars or build their assets, this is probably one of their secrets.
Credit scores are derived from the credit report provided by credit bureaus or Special Accessing Entities like CIBI. We will discuss the significance of a credit report on the next video. Credit scoring is not only limited to banks. Other financial institutions or even commercial businesses employ the same techniques for their KYC or Know Your Clients and pre-employment processes.
For CIBI, a credit score is called myScore: The CIBI Bureau Score and has already helped many institutions in having better knowledge on members’ credit standing, and in providing programs and services towards improving the members’ quality of life.
Are you interested to know your credit score? Have it by following these three simple steps:
- Update your credit record with your Submitting Entity,
- Ensure that your Submitting Entity is compliant to the Credit Information Corporation, and,
- Get your credit score from us!
Do you have any questions? Contact us.