Credit score is a three digit score that are used by lending companies to determine the credit risk of a borrower. Credit scoring is the most commonly used parameter to offer credit in western countries like USA, UK and places like Hong Kong. These credit scores help lenders make quick lending decisions, and there is very low risk of partiality in lending or human error. A conventional system of going through a credit application and giving credit is a laborious task for banks and financial institutions. A system of credit scoring makes things easy for banks as processes will be streamlined in a much better manner. It also brings about standardization in credit and lending.
For customers too, credit scoring can be good news. They are able to avail credit readily at lower costs. Since through credit scoring, banks will be able to reach more customers; they can get benefit from reduced price of the credit.
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