As the world got more systematic and organized in various aspects of life, a system known as credit scoring and rating was introduced into the financial sector and this gained popularity in the 1980s. Credit scoring evaluated a person's lifestyle, earnings, and expenditure and estimated quite accurately how much of a financial risk the person was. This helped banks and other lenders of money to determine whether or not a person was worthy of a loan and what their chances were of recovering the loan.

Credit scores and reports reflect how you have managed your finances over time. It maps the borrowing as well as payment patterns and reflects debt trends. Bad scores stem from not paying credit card bills, mortgage payments, or loan EMIs in time or non payment of dues. Bad credit scores also result from mistakes made by a spouse if you have ajoint banking account or have taken loans in joint names.

In general credit scores range from 300-800 and the higher the scoRead more...Link