Credit Reports ? Why Your Credit Score is Important

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

The score represents a distillation of information gleaned from the three main credit-reporting bureaus ? Equifax, Trans Union, and Experian, regarding your loan and payment history, as well as any bankruptcy filings you may have made. Andy liens or payment defaults will be incorporated into the score as well. The score, which can vary from a low of 300 to a high of 850, represents an attempt to quantify a lifetime of financial dealings into a single number. It has been quite successful. In fact, most people would be surprised to see just how important that score has become and how many businesses use it for reasons that aren't entirely obvious.

Most people would assume, correctly, that lenders would check the score of a potential 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 potential employers, landlords, or even insurance companies. While some states have strictly forbidden the use of FICO scores as a guideline for setting insurance prices, some insurance companies still access the scores in order to assess risk for potential customers. Employers access the scores to see if a possible employee might be a security or theft risk, and landlords may use the score to determine whether or not a tenant should post a high security deposit prior to moving into a rental property.

A substantial argument can be made that there is no way to accurately reduce someone's financial status to a single three-digit number. That said, it is simply a whole lot easier for most companies that need a financial "snapshot" of a customer to look over their credit report, look at the score, and offer a "yes or no" response based on the score alone. Fair or not, this is the way things work today, and it is probably unreasonable to expect lenders, employers and landlords to start looking deeper into their customers' and employees' finances.

The best solution for anyone who is concerned about his or her credit score is to examine their own credit report, which can be obtained for free at annualcreditreport.com. Report any errors to the appropriate credit bureau, and try to check your report once or twice a year. Fair or not, we are our credit score. Making sure that the number is accurate is an important step towards a solid financial future.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding home equity lending/a>.

In The News:

---

Easing Your Financial Burdens With Credit Counseling

It is a well-publicized fact that more of us are... Read More

Credit and Loan Help for Mortgage Loans

Mortgage loans are some of the most difficult loans to... Read More

Credit Scores and Loan Applications

Keep Your Credit History Clean - Remove A Negative Credit... Read More

Automobile Credit Report

When applying for a loan to purchase a car, the... Read More

Establishing Credit ? What You Need To Know Part 2

In my previous article "Establishing Credit ? What You Need... Read More

The Exact Action To Take When You Find Errors In Your Credit Report

There are times when you may be turned down for... Read More

Credit Reporting: How Does It Work?

In order to determine a consumer's credit worthiness, creditors and... Read More

Learn About Prepaid Credit Card

Prepaid credit cards also called stored value card can be... Read More

Credit Repair, How To

Credit repair, is in a word, vital to reestablishing your... Read More

10 Tips To Prevent Credit Card Fraud

Imagine opening your credit card statement one morning and discovering... Read More

What is Credit Repair and How Can It Help You?

There are millions of consumer credit reports on file from... Read More

Online Credit Report and Online Credit Reports

Online credit reports are easily accessible to those interested in... Read More

Commercial Collections And Credit Granting

It is estimated that billions of dollars in delinquent commercial... Read More

Identity Theft Exploding: Here?s How You Can Avoid Becoming A Victim

Americans are more concerned about identity theft than unemployment or... Read More

Teaching Students To Keep Out Of Credit Card Debt - The Parents Role

Parents have the full responsibility for their children and their... Read More

What is Credit Counselling?

Ever wondered what is Credit Counselling? There are occasions when... Read More

Understanding Credit Card Penalties

Because most of us have one or two credit cards... Read More

Bad Debt Recovery

Bad Debt IdentificationIdentifying bad debt is not as easy as... Read More

How To Choose A Credit Card

Your credit score may just be a little number, but... Read More

Cash Advance ? How Does It Work?

If you want a cash advance or a payday/paycheck loan,... Read More

Sound Advice For First Time Credit Card Users

If you are just entering the world of credit cards,... Read More

Free Credit Report ? A Website Typo Could Be Costly

In 2003, Congress passed the Fair and Accurate Credit Transactions... Read More

Credit Card Rates - Negotiating Rates with Your Credit Card Company

Ok, let's face it, everybody hates high credit card rates,... Read More

Student Credit Cards 101

Almost all students have and use student credit cards. Some... Read More

What You Should Know About Credit Counseling

Credit counseling is a free service that many people with... Read More

How You Can Avoid Becoming A Victim Of Identity Theft

To reduce or minimize the risk of becoming a victim... Read More

Low Interest Credit Cards Have Many Advantages

When credit cards are used wisely they can be very... Read More

How Does a Creditor Determine Whether to Grant You Credit?

Credit 101How does a creditor determine whether to grant you... Read More

Good Credit is King, When Qualifying for Mortgage Programs

If you want to purchase a new home or refinance... Read More

How You Can Help Prevent Identity Theft

How can I prevent Identity theft from happening to me?... Read More

Why Does Your Credit Card Rate Keep Going Up?

Have your read your credit card contract through completely? Do... Read More

Identity Theft - How to Protect Yourself

"Like the tan? I got tons of sun on that... Read More

Harassment of People in Debt by Creditors

HarassmentHarassment of people in debt by creditors or their agents... Read More