Many people are aware that they are assigned a credit score, and many people are also aware that lenders will review that score. What many people do not realize is why that credit score is so important and how easy it is to keep track of it. There are many aspects of your life that will be (and in fact may already have been) affected by your credit score, sometimes without you realizing it.
Your credit score essentially allows lenders to determine how much they are willing to lend to you and at what interest rates. Lenders will ultimately give you more favorable interest rates if you have a higher credit score, whether you are applying for a credit card, a car loan, or a mortgage. In addition, you may be surprised to know that many landlords will also consider your credit score when making the decision on whether or not to rent to you. Your credit score is basically an indicator to the lenders and even landlords on how likely it is you will make all of your payments in a timely fashion. Lenders and landlords are really asking themselves, “How good of a risk is this person?”.
Each year, you are legally entitled to a copy of your credit report from each of the three credit bureaus: Equifax, Experian, and TransUnion. Visit the website www.AnnualCreditReport.com to get your free copy. Each of the credit bureaus have their own version of your credit report. Your credit report from each of these three credit bureaus may have slight variations, but your credit report basically includes your personal information, any credit lines you may have opened, and your payment history.
In addition, if you are ever denied credit, insurance, or if your credit rate increases, the Fair Credit Reporting Act says you are are entitled to a detailed explanation of why the adverse action was taken against you. Also, you are entitled to a copy of the credit report and credit score that was used by the lender or insurer in making that determination.
Your credit score is a number that will affect various aspects of your life and knowing how to keep track of it can help you and your family maintain a secure financial future.