What is a credit score? What does it do? And how do your actions affect your score?
FICO (Fair Isaac Corporation) has devised a formula to calculate a number that informs lenders, creditors and anyone else who needs to know, what your financial history is, as well as your worthiness. The higher the number, the better your score. A low credit score would indicate that you are a risk for loan approval, which can prevent you from being granted a loan and would also increase the interest rates you would have to pay.
Experian, TransUnion and Equifax are the three credit bureaus that can determine your credit score. You can get a free credit report from each bureau, every year, to monitor your credit score. If you have a clean credit history that reflects timely payments of credit card bills, or if you have not applied for loans, multiple credit cards or any other assistance, prospective lenders and creditors will know how regular you are with repayments and bill payments. A good credit score is a great asset when applying for a loan.