The FICO scoring logo along with VantageScore, who are the largest creditworthiness companies

What is Creditworthiness?

Milad Hassibi December 19, 2018

When you apply for a loan, a lender wants to ensure that you will have the ability to repay the loan along with the added interest. In order to see if you qualify, a lender will need to know your creditworthiness

Creditworthiness definition

Creditworthiness is an overall valuation that is performed by a lender to determine if a certain borrow will be able to repay their debt or if they are a default risk.

A showcase of a persons credit scores from all three credit bureaus

While there are multiple factors a lender will consider prior to issuing a loan, creditworthiness plays a large role as to whether you will be approved or denied a line of credit.

How is Creditworthiness determined?

A person’s creditworthiness is tracked by the three major credit bureaus: Experian, Equifax, and TransUnion. These companies collect financial data and information on every single person in America and compile it into a credit report.

This report includes information such as past and current debts, open and closed accounts, aliases, and more. Each consumer has three total credit reports, one from each of the three bureaus.

The entries on this credit report are then translated into a three-digit score, known as a credit score. A credit score is the main tool a lender will use to evaluate your creditworthiness. A credit score can range from 300-850, with 850 being the highest credit score possible.

FICO and VantageScore are the leading credit modeling providers. FICO and VantageScore take the information provided to them by the three major credit bureaus and plug it into their proprietary equations, which produces your credit score.

The higher a person’s credit score is, the more likely they are to be approved for the line of credit they desire. Consumers with higher credit scores or creditworthiness also obtain the most favorable interest rates on their lines of credit

Increasing Your Creditworthiness

There a multitude of ways consumers can increase their credit score and thus, their creditworthiness. Whether it be through a secured credit card, a credit building loan, or other options.

CrediReady has a complete guide on increasing your creditworthiness here.

Final Note

All in all, increasing your creditworthiness will allow you to find the financing you need with favorable terms. If you have less than perfect credit and don’t know where to go, CrediReady can help.

Our trusted network of credit repair experts can boost your score and help you qualify for the credit you need. Take a moment to fill out our free no-obligation credit repair inquiry form and start fixing your credit today!

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