Credit Score Ratings

 Credit score ratings are a numerological representation of your ability to use credit wisely. In short, when you borrow money, use a credit card, apply for a loan, or make payments on those debts, you are creating a credit history. There are three credit bureaus who gather information reported from your creditors (those who you do business with such as credit card companies and other lenders) and keep a file on you.
All of the information about your credit use, including your personally identifiable information is managed by these bureaus. When another creditor wants to loan to you, it will request a copy of this report. The goal is to learn as much as possible about what type of borrower you are. Do you make payments on time? Do you use all of your available limit? Do you make payments to reduce how much debt you have or are you applying for new debt.
Why It Matters
Credit score ratings matter. If your score is low, this means you are a high risk to lenders. Many lenders turn down borrowers who are have a very low credit score. If you are given a loan with a low score, you will pay for it with a very high interest rate. Even more importantly, some employers use this information to determine if you should be hired. Keep your score as high as possible is critical.
How to Monitor Your Score
To monitor your credit score ratings, the first step is to check your credit report with each of the three bureaus. You can do this one time per 12 months free of charge. However, it does not include your actual score. It will only allow you to verify that the information contained within your file is up to date and accurate. It is up to you, then, to ensure that you make wise credit decisions so your score can increase.
Additionally, you can purchase a credit monitoring service. This type of service allows you to pay a small fee each month that will allow you to know what your score is. If there is a change to it, it will tell you that there is a change. You can monitor any changes in accounts, balances, and payments. This type of tool is also excellent for ensuring that your identity is protected.
Credit score ratings are a critical component to managing your ability to borrow money. If you plan to buy a car, get a job in a financial industry, get cheap car insurance, or purchase a home, you need a good score. By monitoring your score on an ongoing basis, you can make better decisions for yourself moving forward.