The big three credit agencies in the USA: TransUnion, Equifax, and Experian, all provide credit reports. The credit score on them is a number which shows to lenders the likelihood that you will make repayments based on your borrowing history. If you have a high score then it indicates to lenders that you are more likely to repay the money you owe in good time.
Lenders use your credit report to decide a variety of things such as whether you are eligible to get tuition loans, purchase loans, business loans, or credit cards. It also determines the type of loan you are able to get, as well as the size of the loan and the interest rates. Repayment options will also differ on the basis of your credit score, with better repayment options going to those who will be most likely to repay debts without trouble.
Credit scores are important tools to demonstrate the value of your custom to a lender. Therefore having a good credit score is an advantage giving you access to better rates. Management of your credit score is an essential part of the process of obtaining loans. If you want to borrow a large sum of money to make a significant purchase, such as a vehicle or house, then your high score will show that you are a responsible borrower who repays what they owe on time. The internet is host to a variety of useful resources which provides an annual service to aid people in understanding their credit rating. Another benefit is that it helps you keep track of identity theft by providing you with notifications of each addition to your report. Therefore if you receive a notification when you did not make any payments or borrow any money then you will immediately know that somebody else has used your details to make payments in fraud.
Lenders like to keep a keen eye on how many credit cards you own. This demonstrates to them how much you like to borrow money that isn't yours. It also increases the likelihood that you won't be able to pay money back that you have borrowed. Owning many credit cards raises questions and creates doubts as to the stability of your repayments. They will also look for how well you keep to repayment deadlines. If you often miss repayments then your score will be negatively affected and lenders will not want to loan you any money. Whilst having a bad credit score doesn't always mean you won't be able to borrow any money, it does mean that any money you borrow will be on very high rates of interest, much higher than those who have good credit ratings.