After receiving your completed credit application, the lender conducts a

and compares the findings with the information

from your application. Lenders want to know about your prior credit usage and repayment patterns, your income, the length of your employment, and

your home$-$ownership status. The lender obtains your credit report from a

$,$ which is a firm that collects and maintains

records of the credit histories of many borrowers. Lenders will also obtain your

$,$ which is a statistical measure used to rate

an applicant on various factors deemed relevant to your creditworthinest and the likelihood that you will repay your debt.

Step $3-$ The Lender Decides Whether to Accept the Application and Under What Terms

The approval or rejection of credit is based upon the lender's judgment of the willingness and ability of the applicant to repay the debt. If the

application is accepted, a contract is created that outlines the rules and terms governing the account. For credit cards, this contract is called a

$.$ For loans, the contract is called a

Lenders often offer lower interest rates to applicants with the highest credit scores. This practice is known as

$-.$ If your credit

score is too low, or if the lender considers your application to be too risky for any reason, the lender may decide to deny your application for credit.

However, even people with low credit scores can usually find a lender that will approve credit, although usually at a higher interest rate.