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:

---

What Does Your Credit Score Tell You?

When you apply for a loan or a mortgage, the... Read More

How To Read Your Credit Report

The Fair and Accurate Credit Transactions Act, signed into law... Read More

New Law Provides Free Annual Credit Report

As of Thursday, December 1, 2004, one-third of Americans will... Read More

Top 5 Reasons To Check Your Credit Report Regularly

#1 Make sure mistakes aren't hurting your credit.Reviewing your credit... Read More

Online Credit Report and Online Credit Reports

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

10 Ways To Protect Your Financial Identity Being Used For Someone Else?s Shopping Spree

Someone impersonating you could be spending your hard-earned money.Impossible! Not... Read More

Ten Steps To Building A Good Credit History

Are you thinking of buying a house? Do you want... Read More

Credit Reports Inside and Out

The Credit Report is like your scorecard in the lending... Read More

Making Sense of Credit Card Fees

In addition to the APR (annual percentage rate) and the... Read More

Credit Cards for Home Business

It is wise for you to have a company credit... Read More

How To Survive In A Plastic World, Qualifying For Credit Card

Let's face it, having credit is no longer a choice.... Read More

Small Business Credit Cards

So what do you look for when applying for a... Read More

SuperCharged Secret 2, Credit Card Utopia

INTEREST BEWARE, THERE'S SAFETY IN NUMBERS!Note: The following is part... Read More

Credit Card Entrapment - The Secrets are Out

Have you ever wondered why your credit card bill is... Read More

The Right Way To Credit Repair

If you have a bad credit rating, then you might... Read More

5 Surefire Ways To Eliminate Credit Card Debt

Do you have enormous credit card debt? You are certainly... Read More

Beat Credit Card Companies at Their Own Game!

Have you ever wondered how much money a credit card... Read More

Big Brother Knows Whats in Your Credit Report - How About You?

Whether you are aware of it or not, credit bureaus... Read More

When You Are Eligible For A Free Credit Report

By Federal law, you are entitled to one free credit... Read More

Identity Theft - How to Protect Yourself

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

Dont Fall For A Scheme When Trying To Rebuild Your Credit History

For people with a spotty credit history or bad credit,... Read More

Fair Isaac Corporation Credit or FICO Score

As I am not from the US, I had no... Read More

Our World Of Credit Cards! Which One Is Right For You

There are not many of us who do not have... Read More

Maximizing Credit Card Rewards

In their quest to get you to sign up for... Read More

Rewards Cards - Are They Right For You?

Rewards cards have become the latest rage in the credit... Read More

SuperCharged Secret 5, Credit Card Utopia

LIVING IN CREDIT CARD UTOPIALet's just take a brief moment... Read More

Practical Suggestions for Protecting Yourself From Identity Theft

It's no surprise that thousands of Americans are victimized by... Read More

Credit Counseling: Could it Work for Me?

In the face of financial hardship, many seeking a responsible... Read More

Credit Cards Can Help You Get Out Of Debt

Your credit rating / credit score is based upon how... Read More

Repair Your Credit - The Right Way!

How to Repair a Bad Credit Rating?The Right Way!If you... Read More

What is Credit Repair and How Can It Help You?

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

Credit Suicide

Few things influence the home buying process more than your... Read More

Are 0% Credit Cards Reaching Their End?

Are Credit Card companies starting to feel the pinch? We... Read More