Why your credit score matters

When you apply for credit, insurance, phone service, or even to rent a place to live, providers want to know if you’re a good risk. They use credit scores to help them decide.

A credit score is a number. A high credit score means you have good credit. A low credit score means you have bad credit. A higher score means you’re less of a risk, and are more likely get the product or service — or pay less for it.

Here’s how it works: Lenders pull information from your credit report, like your bill-paying history, how long you’ve had your accounts, outstanding debt, and collection actions. A scoring system awards points for each factor that helps predict who is most likely to repay a debt. The total number of points — a credit score — helps predict the likelihood that you’ll repay a loan and make payments on time.

Credit scores can be used in a variety of ways. Here are some examples.

Insurance companies may use information from your credit report, along with other factors, to help predict your likelihood of filing an insurance claim and the amount you might claim. They consider this information when deciding whether to give you insurance and how much to charge.

Utility companies use credit scores to decide if a new customer has to make a deposit for service. Cellphone providers and landlords also use scores when considering a new customer or tenant.

Different companies have different scoring systems, and the scores may be based on more than the information in your credit report. When you apply for a mortgage, for example, the system may consider the amount of your down payment, your total debt, and your income.

To improve your credit score, focus on paying your bills on time, paying down outstanding balances, and staying away from new debt.

Learn more at Credit and Loans.

Blog Topics: 
Money & Credit

Comments

Thank you

Good deal now take a look at Dish Network and see if they play by the rules , I can tell you now they do NOT

if one's credit score matters so much why can't we get it - we can get reports but not the score!

If you would have stated this a few years ago like back in 2011, I would actually believed this article to be true. The only thing is true is, the higher the number the better your chance are that a company will give you. According to y experience with paying your bills on time, yes that's good and your credit does billed depending on what type of credit. Not all credit builds your score. For example: We constantly hear that cars build your credit. I brought a brand new car off the showroom floor. I paid on time as agreed, and my credit only climbed about 30 points in the seven years. At the end of the loan the auto finance company reported to the credit bureaus that I was 30 days past due. I contacted the finance company and the credit bureau via phone and certified mail. My score dropped over a 100 points when this incident first happen. Long story short, the finance company don't think they should be held accountable because it was their mistake that kick off these chain of events. The credit bureaus are acting like they can't make the corrections. All I know come September 22 2016 if this is not corrected, I will pursue it in court. I've been dealing with this situation since March 2016, and it's getting old.

They did the same to me Frank....go for it. Its almost like they want everyone to actually have bad credit...!!! Been trying to buy a house for months now, no one will give me a loaan due to my daughters car payment being late....not my car, but hers....augh !!! Now Im stuck with high rent, when I really could buy at a lower rate.....

It's all a game. It's a way of getting you to buy in to a product they're selling.

I have a good credit score. What I don't understand is why they want you to have more than one credit card. I pay things monthly in full. Credit Karma has a better score than my bank. It's still above the average. The only thing from me having a higher score is closed accts. and only having one credit card which I hardly use. Why should I apply for a 2nd one that I won't use at all. Confused by all of this. I don't have any loans, a mortgage and I drive a 16 year old car. I hope it doesn't pass before I do. It is a Subaru and has 73,000 miles on it. Am I crazy not to get another card. Credit score is 751 at bank.

This is what I call the richer and poorer Baits of capitalism. They want you to get another card (the bait) so you can spend more. Therfore push your limits of your stable financial resposibility. All to get a Better number. REALLY. This country suckers it's citizens to spend, and hopefully fail at repaying back your bills. That's what a 2nd credit card will do.

I wouldn't apply for another credit card, use the one you have and to do that put your monthly bills on that one credit card and pay them each month instead of the company you normally would pay for that bill.

I have about 3 credit cards: One for doing riskier purchases ($0.00 fraud protection) with a low spending limit, an East coast bank, and a West coast bank. If I get one of my credit cards tangled up with a scammer or fraudulent charges, and the problem gets out of control, I can easily cancel one card without hurting my normal spending pattern nor credit score. I also pay 100% of my credit cards bills off every month. Icing on the cake for two of my cards; they provide me with frequent updates of my credit score FREE, just for having their card. Neither card has an annual fee.

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