The Importance and Impact of Credit Scores
A credit score is a three-digit number that represents how likely a person is to repay debt. Every adult who has ever opened a bank account, applied for a credit card or taken out a loan has a credit score.
The Fair Isaac Corporation, or FICO, is the largest and best known company for calculating a person’s credit score. They calculate these scores by analyzing the information on one’s credit report. Such information includes payment history, how long credit has been established, types of credit one may have, credit limits and how often one uses those limits, how much debt one has and inquiries on one’s credit report.
This credit score, which follows you for life, can have profound impacts on a person’s life. A low credit score can result in credit and loan applications being denied, which can stop a person from buying a new home or vehicle.
“Bad credit can be one of the most frustrating obstacles to overcome for a family trying to buy their dream home,” said local real estate broker Thomas Meyer.
High interest rates on credit cards and loans are another consequence of a low credit score, meaning higher monthly payments. It can also cause problems in getting approved for an apartment as many landlords check credit before renting.
Just as the information on a person’s credit report may change, so too can a person’s credit score. Monitoring your credit report, making timely payments and reducing the amount of debt you owe are the best way to improve your credit score.
Since 1946, Thomas L. Meyer Realty Co. has been highly recognized in the area as “THE” Real Estate Expert. For more information, please visit tlmrealty.com.