What Is A Credit Score and Why Is This Important?

A credit score is a three digit number that reflects a person’s credit standing on their overall credit over time. The credit score is based on your credit report information that the three credit reporting bureaus Equifax, Experian and TransUnion maintain.

Why is the credit score so important? Because, it seems that almost everything we do these days is based on our credit which includes: vehicle loans, home mortgages, bank loans, rental applications, utilities, insurance applications, cell phone accounts, employment applications and existing jobs and the list continues to go on and on.

Credit scores are used to determine whether or not you will be able to secure credit for something you may be applying for and this even includes employment these days. The potential creditor or employer is seeking to find out the potential risk you may pose to them if they grant you credit or employment. In some instances, some employers are running credit scores on their existing employees to determine whether or not their employee may be able to keep their job.

If the potential creditor decides to grant you credit, your credit score will determine the interest rate that you will receive. The higher your credit score the lower your interest rate may be. FICO credit scores range from 300-850. The FICO score appears to be the scoring system used by most creditors.

So, you see your credit score is very important. You may want to consider ordering a copy of your credit score to see where you stand with your overall credit to avoid any unexpected surprises when you apply for credit in the future.