Credit Reports - Why Your Credit Score is Important

If you have got never heard of a FICO score before, you should go familiar with the term. Named for the firm that invented it, Carnival Isaac Corp., the FICO score is the three-digit credit summary that, in essence, reduces your full financial life to a simple set of numerals.

The score stands for a distillment of information gleaned from the three chief credit-reporting bureaus – Equifax, Trans Union, and Experian, regarding your loan and payment history, as well as any bankruptcy filings you may have got made. Andy liens or payment defaults will be incorporated into the score as well. The score, which can change from a low of 300 to a high of 850, stands for an attempt to quantify a lifetime of financial dealings into a single number. It have been quite successful. In fact, most people would be surprised to see just how of import that score have go and how many businesses utilize it for grounds that aren’t entirely obvious.

Most people would assume, correctly, that lenders would check the score of a possible borrower who was applying for a car loan or a home equity line of credit. Many would be surprised, however, to see that the score is often accessed by possible employers, landlords, or even insurance companies. While some states have got strictly forbidden the usage of FICO scores as a guideline for setting insurance prices, some insurance companies still access the scores in order to measure hazard for possible customers. Employers access the scores to see if a possible employee might be a security or theft risk, and landlords may utilize the score to determine whether or not a tenant should post a high security sedimentation prior to moving into a rental property.

A significant statement can be made that there is no manner to accurately reduce someone’s financial status to a single three-digit number. That said, it is simply a whole batch easier for most companies that need a financial “snapshot” of a client to expression over their credit report, look at the score, and offer a “yes Oregon no” response based on the score alone. Carnival or not, this is the manner things work today, and it is probably unreasonable to anticipate lenders, employers and landlords to begin looking deeper into their customers’ and employees’ finances.

The best solution for anyone who is concerned about his or her credit score is to analyze their ain credit report, which can be obtained for free at annualcreditreport.com. Report any mistakes to the appropriate credit bureau, and seek to check your report once or twice a year. Carnival or not, we are our credit score. Making certain that the number is accurate is an of import measure towards a solid financial future.