Credit Score Basics, Part 2: An Overview of Ways Lenders Use Credit Scores for Credit Approval

Date: September 29, 2011
Filed Under:
Use of Credit Scores

In the simplest of terms, lenders use credit scores in three primary

areas of their businesses: 1) as part of the process for evaluating

credit applications, 2) identifying potential new customers that meet

their approval profiles, thereby creating a list of consumers to receive

credit offers (often called account acquisition strategies), and 3)

monitoring the relative health of credit management among current credit

customers. The common bond between all three scenarios is the

overarching business strategy employed by the lender. Some lenders

choose to extend credit only to those with the best credit record. Other

lenders may exclusively target so-called “subprime” consumers, while

other lenders offer credit to the vast majority of consumers between

those two extremes…

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