Most people know their credit report determines the quality of loans and trade credit they get. Did you know banks and other financial institutions sometimes use tricks of the trade to make you pay even more in fees! Here’s some secrets.
Secret: Banks and Other Financial Institutions Prefer you to Have Low Credit Scores.
Financial institutions make more money on people who have what we would consider to be low credit scores. Not necessarily a bad credit report, just missed any payment. One missed payment can lower your score as much as 100 points. The lower your score the higher the rates they charge you.
Secret: When Writing Loans, the Higher the Interest Rate, the More Money We Make, the Better the Yield.
This is why they’ll lower your score if they can. A tiny difference in interest can result in thousands of dollars (if not more) in profit for the bank.
Secret: The Mystery of the Credit Scoring Formula!
Today, you want to find out how your credit score is actually determined. Good luck with that one, because that is intellectual capital that is owned by the credit scoring systems like Fair Isaac, and they’re not going to tell anybody how that works.
For more information on improving your credit score, read on! Access Business Credit.
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