Live With Your Credit Score
In some respects, your credit score is like the cholesterol number for your finances ó it measures one’s overall financial health. Unlike cholesterol, however, the higher your number is, the better. A credit score is determined based on a number of factors, including a person’s credit history ó the number and severity of late payments; the type, number, and age of accounts; and total debt ó as well as public records. Lenders, such as banks and credit card companies, use this score to determine the potential risk in lending customers money.
It’s important to know your credit score, as at some point in your life, you’re likely to take out a loan or apply for a credit card. If you have a good credit score, you are more likely to get that loan or credit card you requested at a low interest rate. You can request a credit report through one of the three major credit score bureaus ó Experian, TransUnion, and Equifax. You can request a free report every 12 months under the Fair Credit Reporting Act, so it’s advisable to take advantage and check your credit score once a year. You will want to check your score sooner than that are if you are preparing for a major credit-based purchase, such as a home or car; have been denied a credit card, loan, or other credit-based service, or receive substandard credit terms from a lender; suspect that your identity has been stolen; and are planning to repair your finances or manage debt.