by admin /
February 12, 2021 /
Credit Reporting Errors

How credit scores are used and why they are important

Credit scores are used in almost every part of life whether you are applying for housing, credit, insurance or a job.  The importance of maintaining good credit is imperative for every day living.  Tenants can be denied housing because of a low credit score even though they do not have any evictions.  An insurance company could drastically increase your payment amount because you are deemed high risk because of your low credit score.  Employers often screen potential candidates to make sure they have decent credit and no financial issues.  Although you can dispute any credit reporting errors or inaccuracies it is important to always keep an eye on your credit and maintain a good credit profile.
Credit scores are mainly used when you want to obtain some type of financing.  This could purchasing a house, buying a car or getting a credit card.  The score determines the interest rate that the lender wants to give you.  This could range from something that is very reasonable to a interest rate that is ridiculously high.  In addition to determining your interest rate the score determines if the lender will lend you any money and if so, how much.  Although there can be other factors included in your interest rate and amount (ie applying for a mortgage you need proof of employment and wages) it definitely plays a key factor. Maintaining a credit score above 700 is ideal but if you suffer from a low credit score there is still hope.  Just know it takes time and energy to raise your score but it is something that you can do on your own rather through disputing inaccurate items, continually paying your bills on time, applying for secured credit cards or raising your existing limit on your credit cards.