Debt and Your Credit Score

The term credit score is being heard more and more often. And while the term is relatively new to the general public, the fact is that this score or rating has been around for a long time. It has only been in the past ten years that the number has become available for private citizens to access. What is a credit score and how does it affect you?

If you do not know, it is time you found out! You would be amazed at how important this little number is in your life.

Once you realize the importance of this number you will begin to fully appreciate why it is so important to use your credit card wisely. And if you do find yourself carrying a balance or feeling pressured by your debt - consult with a good credit card debt counseling company to determine what can be done.

A credit score is a number that reflects your credit history. This number reflects all of your past financial history both good and bad. It is a record not only of your credit cards but of any loans you have taken out. This number includes both secure and unsecure loans i.e. mortgages, car loans, lines of credit and student loans. It also keeps track of when you made your payments. These records also include your banking information, how many accounts you have, if you have ever written a NSF check, when you opened accounts and when you closed them. It also has any public records that may apply to you and your personal finance history. These records would include any law suits filed against you, any bankruptcy, or any legal matter that may have an impact on your financial history.

When it comes right down to it, the only people who know more about you and your personal finances history is you and the IRS.

How does all this information affect your life?

You may not know it but your score affects far more than just your ability to get a credit card.

Any time you apply for a loan, be it a student loan, a car loan or a personal loan your credit score is checked. Not only can this number be the difference between getting the loan and being turned down, it will often affect the terms of the loan itself. People who have higher credit scores will be offered far more attractive rates. Your score might affect the amount of your payments.

Landlords may also want to review your credit score before they allow you to move into a property. Utility companies are also people who want to see this magic number. The amount of deposit you will be asked to pay will often be determined by your credit history.

If you have ever applied for a job, chances are that they checked your credit score. And why would insurance companies be left out. Although they are not allowed by law to base your rates solely on this number, they usually want to see your history. They have their own method of combining this number with their own information to determine what your rates will be.

It is almost scary to realize just how important this tiny three digit number is. Your work, your schooling, your transportation, if fact ,your quality of life can all be affected by this magic number.