What is a Credit Score and Why is it Important?

Credit Score is a word that you hear a lot.  Whenever you want to make a big purchase, such as a car or a house, and you are getting a loan lenders what to see your credit report and then they will assign you a credit score.  It can be maddening having to always wonder about your credit score.  Will be high enough or if it’s too low.  But why does that matter?  Why do lenders rely so much on your credit score?

Your credit score explained

You credit score indicates the amount of risk you represent to a lender as opposed to other customers.  If your score is high, that means you have good credit and that they bank will feel confident that if they lend you money they will get it back.  If you have a low score you will be considered high risk and the lenders will be reluctant to let you borrow any money.

The system that is used by many companies to determine your credit score is based on your credit history.  It’s always smart to build good credit.  This process can start at any age, but it is better to start at young age because the more credit history you have the more reliable you will look to future lenders.

How do you get a credit score that indicates you aren’t a big risk for a lender?

It’s not hard to have a good credit score if you always have it in your mind.  Most people don’t consider the negative affects their actions will have on their credit score which is why they miss payments on their credit cards.  But if they knew how badly miss payments will affect their credit score they would never miss a single payment.  Another good way to get your credit score higher is by never having your credit cards at the limit.  It’s better to keep them around twenty-five percent in use.  This shows lenders that you aren’t always behind and having to charge just to survive monthly.

The good thing about credit is that no matter how bad your score is, there is always a way to fix it.  There are steps you can take to clean up your score and make it higher.  One of the best ways to higher your credit score is by figuring out the problems on your credit report.  You too can look at your report.  Do it and find out any outstanding debts you have and then pay them off.  Find out about negative claims and dispute them.


Your credit score indicates the risk you represent to a lender.  The less risk you are the quicker they will hand you the loan you are looking for.  And Check your credit score and report at Cafe Credit , the better rates you will get.  When you have a great credit score and don’t indicate much risk you will pay less interest than someone who has a poor credit score.  Your credit report determines if a lender will loan you money or not.  Find out how high your score is.  If it’s low, do some things to bring it up.  If it’s already high, enjoy your lower rates.