Credit Report Scores - Why It Is Important For Your Finances - Page 2
In the eyes of the bank Joe's only collateral is his credit report and fico score. He is therefore more of a credit risk than the millionaire. Therefore, in terms of risk, do consumers have a deep understanding of how much of a risk banks see them when they have low credit scores as a result of bad credit reports?
If I were the loan officer, Joe is surely not getting any loan from my bank! Or even if I were really kind and decided to approve, I would hit Joe with a high interest rate so that I recoup my "investment" as quickly as possible before Joe defaults. With this knowledge, why wouldn't the average consumer try to improve upon his credit score profile?
It is not only defaulting on a loan that would bring your fico score down. Any number of things could do that to you. A tiny piece of negative information on your credit report can ruin your fico score or credit score. Most of the time consumers are not even aware of this negative piece of information because they don't have copies of their credit reports to be able to fix errors. This is why providing basic information on credit report scores is so important.
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