Credit Scores: Why They Matter


Your credit score is a number, usually between 300 and 900, based on an analysis of your credit history.  It determines your “creditworthiness,” or likelihood of paying your bills. While your credit report is pages long with specific information about your creditors and payment history, your credit score is calculated each time it’s requested and offers a quick, at-a-glance summary of your financial standing.  It varies hour-to-hour, day-to-day. FICO, Experian, TransUnion, and Equifax are the main companies that formulate your credit scores.  (Most credit scores are referred to as “FICO” scores because the software most credit bureaus use was made by Fair, Issac and Company).  Each agency has modified its scoring for its specific industry such as auto lenders, the banking industry or mortgage providers.  Lenders and credit grantors buy credit scores to determine who is most likely to pay back their loan on time. In May 2009, the average credit score nationwide was 674.


Anyone with a “legitimate business need” may see your credit report. The lower your credit score, the greater risk you pose and the higher interest rates you’ll pay.  FICO provides a loan savings calculator to illustrate, based on your credit score and sample corresponding interest rates, the difference in the total amounts you’ll owe. Your potential savings for having a better score are significant, especially on a hefty mortgage or car loan.  (Banks make it difficult or much more expensive to get credit for those with scores below 720.) It’s standard for landlords to run credit reports and scores to screen potential tenants. According to, a consumer with poor credit will pay 20 to 50% more for auto insurance than a person who has good credit. Insurers generally do not look at your actual credit report.  Instead, they receive your credit or insurance score from one or more of the three major national credit bureaus.

Employers and potential employers often pull credit reports (but only with your written consent). For better or worse, many employers see your score as indicative of your character—they often factor in the number when making hiring or promotion decisions.

Your score

Credit scores are not included with your credit reports.  You can purchase yours at or at any of the credit bureaus for $10-$15.  A relatively new site, offers free credit scores (based on your profile, you will be shown ads for services). Please note: Although you will be pitched for it, know that you do not need to join a credit report monitoring program to obtain your score.

If you are having trouble, contact a legitimate credit counselor like those at Clearpoint Credit Counseling Solutions.  Get started with your no-cost financial analysis or call 800.750.2227 (CCCS) to schedule an appointment.

Meeting with a consumer credit counselor will not affect your credit score in any way.  Beware:  Fraudulent companies prey on people with poor credit seeking a quick fix to ”repair” their credit scores. Only managing your credit responsibly over time will help.

Related Articles