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Frank Isaac and Company is one such organization that provides the tools of evaluating an individual as a credit risk. A consumer today can order his credit score from any of the three national credit bureau systems like Equifax, Experian and Trans Union for a nominal fee. The information from these credit bureaus could be a little at variance from each other as it depends on the information available at that time. A credit score helps the credit giving company to keep its non-performing assets to a minimum.
These credit scores are based on real information and statistics, hence, are more reliable than other methods of evaluation. To judge a consumers credit worthiness creditors usually go into his bill payment habits, outstanding debts, collection action, late payment history etc. and then decide how good a credit risk he is. Most creditors employ their own credit scoring system to evaluate a consumer. This may mean analyzing a group of consumers having a similar profile and then identifying the facets which make them credit worthy and granting a point for each feature that helps to predict who is more likely to repay the loan and make payments at the stipulated time. Most scoring models may also look into your credit application for added information, as to your length of employment, whether you own a home and many such things. Under the Equal Credit Opportunity Act, all applicants are treated equally and are not denied credit on the basis of color, race or nationality.
The only reason for credit denial could be low credit score points, which could be due to any number of factors, including inaccurate information on the credit report, low income, past dues etc. Before applying for credit, it is imperative that a consumer has high credit score and a faultless credit report. Provided he pays his bills on time, pays off any outstanding loan or debt and tries to have a minimum credit card balance, he should qualify for new credit. In case the consumer, after having fulfilled all these requirements, is denied credit, he has a right under the Equal Credit Opportunity Act to demand an explanation from the creditor as to why his application was rejected.