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It’s amazing how big an effect three little numbers can have on you, but make no mistake, your credit score is one of the more important numbers you’ll be associated with throughout your life. Your credit score can affect just about every major buying decision you make, from applying for credit cards, buying a car, even buying a home! Most lending institutions will examine your credit score and history to determine your lending eligibility.

Lending institutions have to examine your credit score and financial history to determine whether they should risk loaning to you. The higher your score, the lower a risk you are for missed or late payments. Also, high scores give financial institutions wiggle room when it comes to fair interest rates.

So what is a credit score exactly and who or what determines what yours is? First off, credit scores are determined by the big three credit reporting bureaus, such as Equifax or TransUnion. That means you technically have three distinct credit scores, though all should be around the same number.

The credit bureaus determine your credit score by examining your credit report and history. There are many different things taken into consideration, such as the level of debt you’ve accumulated compared to your income. They also look at the credit limit you still have available, whether you make payments on time, if you’ve ever missed a payment and more.

From this information, the bureaus are able to assign each consumer a numerical credit score based on their results. Credit scores can range from 0 to as high as 990 depending on the credit reporting agency. Each agency has its own method of assigning credit scores.

Ideally, your credit score should be over 750. A credit score that high ensures loan approval and low interest rates. Depending on the economical climate of the times, anything over a 650 might net you approval and fair interest rates. The higher your score though, the better rate you’ll get.

Your credit score can tell a lender or other inquirer a lot about you as a consumer. It lets them know whether you pay your debts on time, or whether you have any buying or credit history whatsoever. Even potential employers ask permission to pull your credit report and score to determine whether you’re eligible for employment.

Given how important a credit score can be, you should find ways to keep on top of your credit score and report. Many sites online offer free trials so that you can pull your score and report without paying. It’s important to do your research on these sites though, and not get sucked into paying for information you can get for free. Keeping on top of your credit score will allow you peace of mind the next time a big buying decision pops up.

The author, Tawana Rashing, is a debt counselor and credit repair specialist who helps consumers repair and increase their credit score. She is a part time writer for a variety of sites revolving around the topic of credit and credit repair. In her spare time she enjoys cooking, exercising and volunteering at her childrens’ school.

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