January 21, 2009

A credit score is a three digit number that indicates the how likely a person is to pay their bills.  It is calculated by using the information found on that person’s credit report. The range of credit scores is usually between 350 and 850 with the higher the number the better.

Its use is wide spread, but the recognized use is in the application for credit.  The higher the number makes it more likely for an applicant to be approved for a mortgage, car loan, credit card or any number of different types of credit.

Other uses include insurance applications.  The insurance industry has found that clients with a lower credit score represent a higher risk and therefore must pay a higher premium.  Another use is by employers when doing background checks.  Companies want reliable and responsible employees and a credit check is a prefect way to get the picture about a prospective candidate.  Other uses can include applications for cable, cell phones, and store credit.

This makes your credit score one of the most important numbers in your life.  The better the credit score the more likely a person is to get a loan, credit card, mortgage, and car loan.  The loan will also be at a favorable interest rate, which will save lots of money in the long run.  Furthermore, the last reason a person want to not get a job is becuase of a low credit score.