Use of Credit Score - How to Use Your Credit Score
What is the Purpose of a Credit Score?
Credit score calculation and credit score levels are very important in today's economy. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to a customer. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what will be the credit limits.
Using your credit score is not just limited to banks. Other organizations, such as mobile phone companies, insurance companies, employers, landlords, and government departments will also use your credit score when researching your financial stability. Having a higher credit score means you will be able to obtain credit cards with lower interest rates, get a lower interest rate on your next car loan or pay little or no points on your mortgage loan.
When you obtain your free credit report from www.annualcreditreport.com, it does not automatically come with a credit score. You have to pay extra for the score. But getting a score is a good idea so you have some an idea of where you fall in the range of credit worthiness. Also, having your score lets you know what types of loan products you are going to be approved for. Having a low score means you are going to pay higher interest rates on credit cards and mortgage loans. The higher the score, the better your loan products are going to be.