Why is credit score important

Our opinions are our own. Here is a list of our partners and here's how we make money. Your credit scores determine a lot more than the loans you can get and the interest rates you pay. Insurers use credit scores to set premiums for auto and homeowners coverage. Landlords use them to decide who gets to rent their apartments. Credit scores determine who gets the best cell phone plans and who has to make bigger deposits to get utilities.

You can leverage great scores into great deals — on loans, credit cards, insurance premiums, apartments and cell phone plans. Bad scores can hammer you into missing out or paying more. The lifetime cost of higher interest rates from bad or mediocre credit can exceed six figures. For example, according to interest rates gathered by Informa Research Services:.

Since credit scores have become such an integral part of our financial lives, it pays to keep track of yours and understand how your actions affect the numbers. You can build, defend and take advantage of great credit regardless of your age or income. Your scores also differ based on the scoring formula used and which of the three credit bureaus supplied the information used to create the score.

Why is a credit score important? Why can a credit score differ? How can I improve my credit score? What are other benefits of a good credit score? Posted in: Financial advice. Contact Number. Close We'd love to chat, how can we help? What can we help you with? You have you used Mortgage Choice before: Yes I want to keep my existing broker.

You could also save money on your security deposit if you have higher credit scores. Some utility companies may consider your credit reports and scores to determine how likely you are to pay your bills on time. If you don't have a strong credit history, you may have to pay a security deposit to initiate utility services. While each consumer likely has dozens, if not hundreds, of credit scores , the good news is that what makes scores go up or down across different models is almost always the same.

It's just that different models may apply different weights to certain factors. There is no secret sauce to getting good credit scores. Generally speaking, the best way to improve your credit scores is to do the opposite of what caused them to go down in the first place, and give yourself enough time for them to improve. While each scoring model gives different weight to the factors that affect your score, there are usually seven factors that go into determining your scores :.

Want to instantly increase your credit score? Until now, those payments did not positively impact your score. This service is completely free and can boost your credit scores fast by using your own positive payment history. It can also help those with poor or limited credit situations. Other services such as credit repair may cost you up to thousands and only help remove inaccuracies from your credit report. Experian Boost helps by giving you credit for the utility and mobile phone bills you're already paying.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. But instead of using a traditional credit score, insurers may use credit-based insurance scores —along with other factors. Auto insurers, for example, may also consider things like your age and the car you drive.

Credit may also be considered when you set up accounts with utilities and cellphone providers. With good credit, you may be able to avoid paying deposits or be offered more favorable contract terms.

When you apply for a lease to rent an apartment or a house, the landlord may check your credit history—in addition to your criminal and rental histories. Sometimes requests are included in rental applications.

So it can help to read the fine print. But if a landlord has received multiple applications, they could decide to rent to another person instead. If you apply for a job, some employers may ask to run a background screening, which can include a credit check. Rules vary about how information from background screenings can be used. And companies are required to get your written permission to run a check.

But if you decline, you might not be considered for the job at all. Keep in mind that you can still get a job with less-than-perfect credit. There are no quick fixes to improve credit.