Your FICO or credit score is an overall evaluation of your financial health that helps lenders determine your creditworthiness. Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other types of credit. Higher credit scores mean you are more likely to be approved for most kinds of credit and pay a lower interest rate for that credit.
Your credit score can come between you and many things in life. Since a FICO score is the excepted standard for many companies, a low score will mean you have to pay higher interest live score rates, if you can get a loan at all. It can also mean that you will have to pay higher deposits for utilities such as telephone, electricity, cellular phone plans and many other services. While this may not seem fair to most consumers, it is done by companies to determine whether or not they can rely on you to pay your bills on time.
Typically, those with a lower credit score have issues with paying their debts, or paying them on time. This indicates to companies and banks that the person is probably a high risk case and if they do decide to approve the loan or service, they must protect themselves from that risk by charging more. It is an excepted practice that can restrict or impede the lives of many people.
Your credit score is a valuable asset for many reasons. A very good score allows you to obtain credit more easily and at lower interest rates. But a high credit score can also help you qualify for a cell phone, avoid or reduce a deposit paid for utilities for your home or apartment, and get lower insurance premiums. Your credit score may also be used by potential employers and landlords as a screening tool. Your credit score is very valuable, and you should treat it like the asset it is and always work on improving it.
Three quarters of all lenders use FICO scores when considering requests for loans or credit. To enhance your chances of being approved for any type of credit and get the best interest rates, your score should be 720 or higher.
Lenders look at your credit scores all the time. They look at your scores when deciding, for example, to extend credit to you, or whether to change your interest rate or credit limit on an existing credit card, or to send you an offer through the mail. Having good credit scores makes your financial transactions much easier and can save you money in lower interest rates, lower insurance premiums, and reduced deposits or down payments. That’s why your credit score is a vital part of your financial health.