How Credit Scores Make Things Easier For Us All

You probably know of your credit score as the three-digit number that creditors and lenders use to approve your credit card and loan applications. Credit scores haven’t always been used in the banking industry – or other industries for that matter. They came about as a way to make application approval easier, faster, and less subjective.

Lenders Make Decisions Easier

Credit scores are a way that lenders can quickly gauge your creditworthiness, or the risk that you’ll default on a credit obligation. Lenders could just use your credit report to get information to make this decision, but credit reports can be dozens of pages long for people who have long credit histories.

Without credit scores, lending and pricing decisions would be more subjective. It would be one person’s decision whether information on your credit report means you’re more or less credit-worthy.

Your score sums up the information that’s in your credit report and assigns a number to your microloan behavior. If you’ve been responsible with credit, then your score will be Vegasgoal higher. On the other hand, if you’ve been irresponsible, your credit score will be lower.

You Don’t Have to Wait for an Answer

The good thing about having a score is that creditors and lenders can quickly decide whether you’re approved and at what rate. Most banks have a credit score cutoff that makes it easy to make a decision about whether you’d be approved. And if you’re approved, they can use your credit score to give you an interest rate on your credit card or loan. Insurance companies use your score to give you an insurance rate and utility companies use it to decide whether you should pay a security deposit.

Get an Easy Answer About Your Credit Standing

Lenders aren’t the only ones who benefit from your score. Your score is useful to you, too. When you need to check your credit health, your credit score is a good way to understand where your credit stands. When you check your credit report, you get a detailed look at how you’ve paid your bills and managed credit, but you don’t get an understanding of how good or bad you’ve managed credit. Your credit score tells you whether the actions you’ve taken have helped or whether they’ve hurt your credit standing.

How to Check Your Score

Believe it or not, there was a time that consumers didn’t have access to their scores. Lenders could use this information to judge you, but you had no idea what your score was. Fortunately, that’s not the case anymore. Now, you can find out your score by purchasing it from myFICO.com or one of the three credit bureaus. You can also get a free credit score through CreditKarma.com and Quizzle.com. Watch out for other sites that claim to give you a free score, but ask for your card number so they can charge you if you don’t cancel a trial subscription.

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