While the loan officer's personal judgment of the borrower is important, banks try not to rely too much on the banker's subjective evaluation of the borrower. By following the objective standards set by the scoring system, the banks make fewer bad loans.

Although each lender has its own system and asks its own questions, the key questions are universal. By knowing precisely what lenders are looking for, you can identify areas in your credit profile that need improvement, pinpoint strengths and adjust your credit image.

Lenders have found that people who move frequently, don't have telephones or can't keep steady jobs are poor credit risks.

The scoring system

Test yourself with this sample scoring system to get an idea of how lenders evaluate an applicant's risk. Add up your points for each question, and then compare your total to the scoring list below.

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These questions, or something very close to them, appear on most credit scoring systems. The questions are selected and the points assigned by the bank's Consumer Credit Policy Committee. The policy committee then prepares a set of guidelines for applying the scoring system to guide the loan officer. Not only will this scoring system vary from bank to bank, but even within the same bank the criteria will change, depending on national and regional economic conditions and the bank's own competitive position. Obviously, when loan money is abundant, the criteria will not be as strict as when loan money is tight.

 Now put your score in perspective. In this sample, you could score a possible 22 points. The guidelines provided to the loan officer might read like this:

0-11 points (0-50 percent of possible points):
Reject outright. Don't waste time on this application.

11-13 points (50-60 percent of possible points):
Review very carefully. Do not approve unless there are other good reasons indicating that credit should be  granted.

13-15 points (60-70 percent of possible points):
Review with a bias toward approval (Ibis is the profile of the typical consumer and indicates a reasonable  risk)

 15-20 points (70-90 percent of possible points):
Grant the loan unless there is good reason to deny.

 20-22 points (90-100 percent of possible points):
Automatically grant credit within reasonable limits.

If you fall in the lowest category, your application will be rejected outright. But don't give up hope. You may be able to obtain a small loan with some collateral, or perhaps by finding a co-signer. (A co-signer uses his credit to guarantee yours by accepting responsibility to make good on the loan if you don't.) An example of this applicant might be a student without steady employment or a permanent address who may be able to obtain a car loan if his parents co-sign.

If you fall in the 50-90 percent categories, you can expect a full review of your application for credit. Someone in the lower range of this category may require a co-signer and/or collateral. If you are in the 90-100 percent range you can generally get unsecured credit on your signature alone.

Think about this scoring system. Obviously, each bank keeps its point system secret. Only a loan officer knows how many points you need to pass the minimum requirements for credit approval. But you can improve your chances for winning credit once you know the system.