Usually, if you want to qualify for a loan from the bank, you will need to have a good credit score. Basically, a credit score is a numerical rating of your credit worthiness. Now, how does it apply to getting a loan from the bank? Well, the bank will look at your credit score to find out whether you would make a good debtor. The score tells it whether there is any risk involved in lending you money. If you have a poor score that indicates a greater risk that the bank will not get paid back the money lent out to you.

However, a high credit score will tell the bank that you are more likely to pay back the loan along with the corresponding interest. The bank will prefer to approve the loan if you have a good score. As you might guess, they would not want to run the risk of your defaulting on your loan, which would require them to take you to court or to pay a collection agency to recover their money--costly actions they will only take as a last resort. Therefore, it’s clear that the bank will decide if you qualify for a loan based on your credit score. You may be wondering how the bank is able to learn your credit score in the first place.

Institutions that offer credit to their customers frequently employ what is known as a credit manager. Unlike money, credit itself cannot act as a unit of account. However, many forms of credit can act as a medium of exchange.

Ensure that you are prepared with all relevant documents, and present them in an orderly fashion.