Basically, a credit score is a method by which lending agencies attempt to quantify your worthiness for credit based on your past history. It is important anytime you attempt to get a loan because your credit score will determine your interest rate and maximum loan amount. If you go old school and decide to only use cash for everything, then don't worry about it.
Typically people refer to a FICO score when taking about a credit score. The acronym "FICO" stands for Fair Isaac Company and they were the ones who came up with a specific formula to gauge an individual's credit worthiness. Your FICO score takes into account a lot of information such as your credit card payments, how long you've had a credit history, your available lines of credit, recent credit card applications, your revolving credit, and much more. You are able to purchase your FICO score from myFICO. This is the only legit site I have found as other sites trick you into signing up for their credit monitoring services.
There are three credit bureaus that have their own variations of the FICO score. Experian, Equifax, and TransUnion. Two out of the three can be purchased at myFICO.
Banks and other financial institutions look at your FICO score to make a decision on whether they want to risk lending to you and at what interest rate they are willing to take that risk on. The lower your FICO score, the higher the interest rate is going to be.
I hope this information helps you. Let me know if I can be of further assistance by clicking my profile name above.
by Davinagirl37 years ago
My husband and I are looking to buy a house in the upcoming year. We have run into some trouble looking for a lender because our credit is, for lack of a better term, crap! I am looking for ideas on how to...
by Zara Rasul5 years ago
How do I find my FICO score for free?
by CWanamaker4 years ago
What are some tips for improving your credit score when no one will issue you a credit card or loan?
by Karina S.7 years ago
Do you know how to improve your credit score?
by JaneKnowsbest5 years ago
Why is a credit score a factor in things such as price for auto insurance or employment?
by ishitha16 months ago
Hi, I am Ishitha Nupur i want to improve my credit score to get personal loan. Please suggest me
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