To individuals unfamiliar with the phrase credit score, they will be forgiven to think it is the score one gets annually to show the number of purchases one has made using a credit card. Contrariwise, a credit score is a number indicating how credit worthy you are. The score is determined by various factors such as the total amount of your outstanding debt, your paying habits, your spending habits, your earnings and your past credit history.

Be advised that all this information is collected and recorded by accredited credit reference agencies such as Experian, TransUnion and Equifax. All your credit transactions are always monitored and filed by these agencies and credit bureaus for future reference. A credit score is very crucial as it determines your eligibility for a loan such as a school, car or house loan. A credit score is accessible by all lending institutions; hence a bad credit score means days of seeking financial assistance in terms of loans will be all gone.

A credit score also determines an individual’s character – sense of responsibility and financial know-how. This is the reason why government agencies and private companies today are also using the score to screen potential employees. Such monitoring and scrutiny is particularly of importance for employees who are seeking posts that relate to financial matters of the companies. the score simply explains employee’s capabilities of tackling financial matters.

And if you think you will get away with a bad credit score since you are not seeking a loan or a job, think again. Credit card companies and mobile phone companies are also using the credit score to determine the right target market. Individuals with high credit scores are perceived as those with the power to spend, hence are the right market to extend credit card services and mobile phone packages.

In applying for a loan, a credit score is the main determinant of the amount of loan you are eligible for, the interest rate that you should be charged and the duration to be given for repayment. This is to say that if a credit score is low, not only is your chance of getting a loan very slim, but by sheer luck if you get approved, you will be charged a very high interest rate and shorter repayment duration. You can get your FICO credit score online by paying a fee of $12.95 to Equifax.

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