As mentioned earlier, credit scoring utilizes only the information contained in your credit report. It is especially important to point out that your income level is not a factor considered in calculating a score. In other words, someone with a high level of income may have a low credit score, while someone with a low income may have a high credit score. It all depends on the past use of credit and the factors. The primary purpose of a credit score is to help lenders assess the level of risk.
In addition, using credit scores has helped lenders and creditors “speed up the process.” This automation has helped to reduce the amount of personal review time for a credit application and has brought about the nearly “instant” approval of a loan and evaluation of a borrower’s credit.
A credit score is also used by some creditors to help them decide based on your credit score and the predicted level of risk, what interest rate and/or loan terms will be offered.
