How Your Credit Score Affects Your Life


Your credit rating influences home loans, auto loans, credit cards, insurance, and other important financial concerns.

Your Credit Scores

The best credit scores are born from healthy financial lifestyles. The two most important factors in establishing good credit are paying your bills on time and avoiding negative information in your credit history such as collection agencies and bankruptcy. With a good credit score, you have managed your credit lines very carefully, you are not in a lot of debt, and you only open new lines of credit when necessary.

Review Credit Reports to Improve Credit Scores for Free

You have three credit reports, one with each of these credit bureaus: TransUnion, Experian, and Equifax. The information on each of these reports can be different, and each can be reviewed by lending, credit, and other institutions concerned with your credit history.

Be very careful when checking your credit reports. There are many companies offering "free credit check scores" or "instant credit reports". Most, if not all, of these companies services are not free. Many make it very easy to sign up with a monthly fee, while making it very difficult to stop the so-called subscription or membership.

There is no reason to pay to review any of your credit score reports. Your credit reports are available to you for free. To get your truly free credit reports, go to

Home Loans

When you are working with a mortgage lender, they will call for and review all three of your credit reports very early in the process of appling for a loan. Home loan interest rates can vary widely. If your credit score is good or better, at least 700, you will likely qualify for standard rates that are closely related to prime lending rates. If your credit score is lower than 700, the rate a lender will offer will probably be significantly higher.

Auto Loans

Looking to buy a vehicle? You might be surprised to know that your credit score can actually determine what kind of car you can buy. Low score? You might not qualify for that new luxury sedan you're dreaming of. Your credit score can affect not only the interest rate on an auto loan, but the size of the down payment as well.

Student Loans

Student loan lenders will check your credit history and scores when you apply for a loan. Because many students are young with little or no credit history, lenders will often require a cosigner with good credit.

Credit Cards

Most of us receive more credit card applications than we wnat or should ever use. However, credit card companies are tightening their practices, and some will ask to review your credit reports when you apply for a new card. In some cases, a higher credit rating can mean a lower interst rate on the card, and rewards that grow with your purchases. A lower credit rating can limit you to pre-paid cards.

Apartments and Other Rentals

Landlords and apartment managers usually have to do business with never ending parade of tenants. They don't want any financially troubled tenants to add to their responsibilities. If you are applying to rent an apartment, the lanlord could pull your credit reports to see if there might be any indication that you might not be a responsible tenant. With a lower than great credit score, it's possible that you could be denied a rental, asked to pay higher rent, or asked to pay a larger deposit.


Insurance companies look at information that is slightly different than what creditors and lenders review, but the insurance agent is still looking similar data and assessing your rating. Like creditirs and lenders, insurance comapnies are calculating your level of risk. And just like other institutions, the higher your credit score, the better your rate.

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