What Exactly Is A Credit Score?

Your credit score is a financial calculation of your past credit history and your capabilities of managing money. Lenders and creditors employ these scores to decide on credit approval, credit limits, and interest rates.

Because the measurement of your financial health often comes down to a single number (your credit score), it is essential for you to learn how you can boost your score and to make good choices to maintain it.  

Many different groups will see your credit score throughout your professional life. This starts with creditors and lenders when you apply for credit cards, car loans, and mortgages, but it does not stop there.

Cell phone and utility companies considering charging you deposits, insurance companies determining your auto insurance rates, and even employers deciding who to hire (about 50 percent check prospective employees scores nowadays) will all look at your credit score. 

When these groups check your scores it causes a hard inquiry that the credit bureaus will note. Checking your own score does not affect it. 

Lending decisions are heavily reliant on credit scores, but it is not the only element that lenders consider. They will also look at your income, your debt to income ratio (DTI), and your past history of timely paying bills. 

This is why experts recommend that you maintain a DTI of below 30 percent whenever possible. 

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