A credit score doesn’t tell a lender if you will pay back a loan.
Well, nothing is a guarantee in life. However, that’s exactly what its designed to do. It provides the recent history of the borrower and how much debt they are carrying now to show that the borrower is capable of servicing the debt. All of the included factors go into the score. I mean, the components of the score are not a secret. Is publlished right on their website:
A credit score tells a lender how much off a guarantee it is to make money of lending you money.
Kind of. If the borrower is bad at paying back debts, then the lender increases the interest rate to cover the likelihood the borrow will default on the loan. Keep in mind, they aren’t trying to get all of their principal back from the risky borrowing through interest before the borrower defaults. This risky borrower is pooled with other risky borrowers. The higher interest rates they all pay covers the few that default.
Well, nothing is a guarantee in life. However, that’s exactly what its designed to do. It provides the recent history of the borrower and how much debt they are carrying now to show that the borrower is capable of servicing the debt. All of the included factors go into the score. I mean, the components of the score are not a secret. Is publlished right on their website:
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Kind of. If the borrower is bad at paying back debts, then the lender increases the interest rate to cover the likelihood the borrow will default on the loan. Keep in mind, they aren’t trying to get all of their principal back from the risky borrowing through interest before the borrower defaults. This risky borrower is pooled with other risky borrowers. The higher interest rates they all pay covers the few that default.