The Importance of Your Credit Rating

by Elisa Adams

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Do you aware of the importance of your credit rating?

Believe it or not, many consumers today don’t really understand the importance of their credit rating and its effects on their lives. Some of them are not even aware about the existence of credit rating and the fact that they are able to access to it online.

The rating comes from credit score called FICO score – a mathematical way of condensing all the information in your credit history down to a single number that represents your credit worthiness and loan risk. Through this numbers the lenders don’t have to go through your entire detailed credit history report. One number tells it all.

Credit scores range from 300-850. This single number has an incredible influence on your chance to get loan for business or other purposes and yes, the lenders judge you using this number. The higher your credit score is means the more rates that you are going to get. And that’s why it is extremely important to monitor and manage your credit rating.

In other way, your credit rating reflects what is written on your credit report. It able to determine what you pay for auto financing and leasing, credit cards, mortgages, and insurance.

In fact having a low rating can hurt your loan options. You are evaluated by your credit rating every time you apply for getting loan or even when applying for insurance or a job. That’s why you should always be aware of your standing and don’t forget to monitor your credit rating by regularly asking for your credit report from the credit bureaus.

The best way to improve your credit rating is always paying your bills on time and avoid bankruptcy. Be patient as the rating will not improve just in 1-2 days and in fact sometimes it takes 6-7 years for negative information in your credit history to disappear. Keep in mind to get copies of your credit reports to make sure there are no mistakes or old information that should have been removed.

Do practice self-control and avoid unnecessary spending at all costs. And it can help you to improve your credit rating. And good credit rating helps you a lot in dealing with many things. And this is the importance of your credit rating.