What Is A Credit Score?
You may have heard about the good and the bad credit score, but let’s get back to basics. What is a credit score? Why is it so important?
First and foremost, a credit score is a three-digit number given to those with a social security number and the range is from 300 to 850. The higher the number, the more creditworthy an individual can be. The software used to come up with the score is the Fair Isaac and Company (FICO), which is why credit score can also be called FICO score.
It is given to a person based on how he or she pays the bills. When you have loans, your creditors report your payment records to the three credit bureaus namely Experian, TransUnion, and Equifax.
When you pay your bills on time and in the agreed amounts, it will have a positive impace on your score. Otherwise, your credit score will suffer. Thus, you are forced to pay higher interest rates compared to those who have good ratings.
What makes it harder for people who have low credit scores is getting approved for a loan, be it a big ticket item or mortgage. Boosting your credit back up is not only difficult, but it can get confusing at times as well.
When that happens, it is best you seek help from someone who is more experienced or skilled as they may give you sensible advices to get your score improving.
In addition to that, your credit report can have errors in them, that is why it is highly recommended to have it monitored regularly. If you fail to do so, the errors will generally drag your rating down.