The first step is to understand the credit granting process. With home foreclosure rates growing daily and personal bankruptcies soaring, lenders are taking a closer and more skeptical look at credit histories and reevaluating the implications of credit scores. Historically, one’s credit score, that magical 3-digit number generated by credit bureaus with range between 300 and 850, has been the major determinant creditors relied on to decide whether you were approved for credit, how much, and what terms applied to your individual transaction.
This number based on the individual’s credit report is still relied upon but with greater scrutiny and increased caution. Because the real basis for credit is the likelihood and the ability to repay, the economy has thrown a new wrinkle into the mix on the ability to repay side of the ledger. People with good credit histories are not finding themselves unemployed and unable to make repayment. This phenomenon makes those who grant credit jittery.