You have probably noticed several advertisements for checking your credit score or credit report. But, how important is your credit score anyway? First, we should discuss a little about credit scores and credit reports.
A credit score is a number that shows how likely you are to repay your debts. A credit report will show the factors that led to your determined score. Think of this like a financial resume, which lists your entire credit history (credit accounts, credit cards, loans, credit limits, account balances and payment history).
So, how can your credit score help? When you have a good credit score, you will in turn have better interest rates, better/faster chance of approval for a loan, higher credit limits, better car insurance rates, easier approval for rental property, and you can even avoid security deposits on utilities.
If you have had a credit or financial meltdown, you may be avoiding credit altogether, but this is one of the worst things you can do. You need to reestablish your credit after a credit or financial crisis to show the credit-scoring bureaus that you have learned your lesson and are currently managing your credit in a responsible manner.
Are you concerned about your credit score? Keep in mind that there are simple steps that you can take to improve your credit. Still worried about your credit? Schedule a free consultation to learn more about credit repair!