Why a Credit score Rating Issues | Full Information
Your credit score and history are the most important parts of your overall financial life. Basically, your credit score will follow you forever and will play a huge role in numerous important financial situations in your life. Most people think that credit score is only important when it comes to getting approved for loans or credit cards, but it actually goes way beyond that.
Credit Score vs. Credit Report
You will hear the credit report and credit score swapped, but it is important to understand the main difference between the two. Basically, your credit report is the detailed history of your credit information. It contains current credit information, late payments, balances, personal inquiries and identifying information, as well as bankruptcies.
On the other hand, your credit score is the three digit number based on your credit report information. After you have considered all aspects of your report, there is a math formula that you can use to determine what your score needs to be. If the score is high, it is better. The industry leading credit score is FICO, which ranges from 300 to 850.
Whether you buy homeowner insurance or insure your vehicle, your creditworthiness is likely to play a role in determining your premium. Typically, insurers create something called an insurance score, which is largely based on your own credit score, but takes a few factors into account. Bad credit can cost you big bucks each year in additional rewards, while good credit can qualify you for discounts.
Everyone knows that when you have a low credit score, it is much harder to find banks or credit card companies to lend you cash, but it goes beyond that. That being said, not only does your score affect whether or not you can borrow cash and on attractive terms, but everything from your insurance rate to employment opportunities.
Employers can check your balance
A controversial and increasingly common practice is now taking place when employers review the creditworthiness of potential new employees. Arguments for this are that employers believe they could use credit history to determine responsibility. There are situations when a bad credit history can be due to something that is completely out of control but which you should consider.
Credit Score Resources
You may have to pay to get your full credit history and credit score, but it will be worth it and could be all the difference in getting you the mortgage or loan that you are hoping for.
Should You Think About Your Credit Score?
If you are concerned about your credit score, it pays to invest some time to increase your credit score. Other steps that could help include using your credit card responsibly, e.g. B. Maintaining a low loan utilization ratio, paying bills on time each month, and considering how and when to open new accounts over the long term.
However, you don’t really have to think about your credit score. You don’t need FICO to tell you that you are making good financial decisions. You can live a life with bad credit, but good credit can still make a difference. Hope you get all the answers on Why is a Credit Score Important?