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The relevance of Credit score in today’s world

By Janet Lacey
Published: Friday, June 25th, 2010

Almost everyone would have heard about credit scores today. After all, a credit score is what defines your financial status in the society and it is in your best interest to make sure that you maintain it at a good value. People often get carried away and spend more than what they make, which is why they end up in debt. With this score, the money lenders can get to know exactly how you are with your finances and whether you are a creditworthy person or not. It is quite likely that the lenders might think twice before giving you any money, but as long as you maintain this score, they won’t have a reason to reject you.

Where is it used?

Credit score is a factor that is used by pretty much anything that involves money and requires you to transact with someone. It is crucial that you keep this factor in mind so that you don’t take this value for granted and end up paying the price for it. In fact, majority of the people who learn about their scores do so because something went wrong with their money and they want to find out where exactly they might be able to get the money back from.

Does it change often?

This is a question that many people ask about credit score. The truth is that these scores often remain more or less along the same line unless something dramatic has happened with your finances. Hence, don’t worry about checking your scores often in short intervals of time as it is not going to help with anything. In fact, you should try and focus on reducing your debt and clearing loans if possible rather than worry about things you cannot do anything about. However, if you frequently skip on bill payments, then you might want to change that trait and start paying money on time.

Credit scores and your preferences

Unlike insurance, credit score does not factor in your personal life and only makes use of data that is relevant to the financial position of your life. Hence, if you decide to get married, that will not alter your score in any way. However, if you decide to buy a new car because you got married, then the purchase of the car is importance to the creditors. This is something that people get confused with. It is not uncommon for people to get mixed up with the aspects that account for their respective scores. Speak to someone experienced or do some basic research to find out what really matters and don’t assume anything.

Don’t do anything if you are not sure how it might impact your credit score. In fact, seek help if you need to before your money takes control of you. Although it is not required, some people might require help to manage their finances. Hence, if you are one amongst such individuals, then you too should call in for help before your finances are thrown out of gear and there isn’t much that you can do.

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