The Importance Of A Good Credit Score

Your credit rating is an important part of your financial portfolio

. We typically spend a lot more time considering our assets (i.e. bank balances, investments, real estate) than we do our liabilities. But there are some big wins to be had on the other side of the balance sheet. It will matter what type of rate you get on your mortgage, how flexible your company is, and whether you land that next high paying job. Those big wins matter. And theyre all affected by your credit score. Also known as your FICO Score.

Obviously a myriad of lenders (credit card companies, mortgage companies, banks, etc.) use this score to assist decide if they would like to use you. If you want to use those products, then youll want probably the most favorable interest rate possible. A high score can mean a minimal rate on your mortgage.

The Fair Isaac Corporation (FICO) setup the FICO Score so that lenders could quickly determine if youre to be trusted when it comes to repaying debt. They claim that the larger the score, the more likely it is that you will be capable of paying back a lender for money borrowed.

Other companies also use the FICO Score to determine when they wish to accomplish business along with you. For instance, cell phone and TV service companies often need to figure out how credit worthy you're before they invest a lot of upfront cost in you. A high score will help you avoid a large deposit requirement to setup a merchant account.

Given those reasons, its probably smart to at least do some research and then try to improve your credit score. Even many people within the anti-credit camp will agree that they need to depend on a nice credit rating to get a decent type of loan.

by: Victoria Wallace

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