Your credit score – why is it important?

By now, you are probably aware that you have a credit score. The only way you do NOT have a credit score is if you have avoided banks and credit cards (not a wise choice in today’s world…read on).

Why is a credit score important?  Banks and other lending institutions feel that your credit score is an indication of whether you are a financial risk.  It helps companies/ landlords/lenders decide whether they want to work with you. Your score is reviewed by many, and a bad score (or no score) can limit your options.  Businesses that will check your credit score before doing business with you, include (but are not limited to):

  • Apartment complexes 
  • Mortgage companies
  • The company where you want to work (many check credit scores before hiring)
  • Car rental companies and hotels
  • Insurance companies
  • Cell phone companies and other service providers

Your credit score indicates your responsibility, discipline, and ability to manage your personal affairs.  While it may seem like a weak indicator of who you are, it may be all the lender/landlord/prospective employer has to look at in making a decision about you. 

What do you think about credit scores as an indication of responsibility? Are you managing your credit score? Lt us know!

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8 Comments Add yours

  1. Rebecca says:

    Because my parents have helped me with most of my expenses, I don’t have a credit score. I have never made a major purchase or taken out a loan and I don’t have my own credit card. When I tried to look at my credit score for a class, I didn’t have one, which means that businesses probably can’t find it either. This could possibly hurt me later on because businesses have nothing to judge my financial responsibility on. If I were to buy an apartment on my own, I have no credit score for them to look at. This could be the only chance that businesses give me to prove myself, which could end up hurting me in the long run.

  2. Lindsay says:

    I think credit scores say a great deal about how responsible a person is. If someone makes their credit card payments on time every month then this will be reflected in their score. It shows that they are disciplined and responsible enough to acknowledge their debt and are in the process of paying it back. Lower credit scores are usually the result of late payments, large amounts of debt, negative accounts, or a high number of inquiries. This type of credit history is typical of someone who is not as responsible when it comes to personal finances. Since credit scores are used today by many businesses and employers, I think it is very important to take control of your finances so that your credit score will increase over time.

  3. Kai-Lee says:

    When we became of age to have a credit card, our parents would not allow my brother or I to have one. It never bothered us that we could not get one until our parents bought us a house to live in while in college. We found out that if they would have let us get a credit scores we could have got a loan on the house more easily. We also found out that we could have gotten a better loan. My brother and I now feel that they should allow us to have at least one to build our credit score for later when we buy a house of our own.

  4. Shelley says:

    Fortunately and unfortunately, I have been able to avoid banks and credit cards. Therefore, I have NO credit score at all. I am beginning to see the consequences of having no credit score at all, as I am apartment hunting among other things. Many apartment complexes need to run a credit score to rent you an apartment. If I do not have a credit score upon graduation, I will have to have a guarantor sign my lease. After reading this blog, I believe that I am going to try to work harder to find some way to build credit before graduation.

  5. Siomara Pekmezi says:

    When I first started having a credit card(7-8 years ago) I never understood why having a good credit score was so important but I continued to work on making sure that no negative feedback was entered in my report regardless. In 2010 when I needed an auto loan, the finance company looked at my work history and realized that I did not have a steady income as I was an Independent contractor but after evaluating my credit score, they approved my loan request with a fairly ow interest rate. Having a good standing with the credit bureaus is very necessary in the society we live in. If you do not have the money to pay for anything you want upfront and you may need a credit card, loan, or mortgage, you need to be in good standing.

  6. Kamekia Frazier says:

    The credit score should not be the only way to judge a persons financial worthiness. Yes it’s a way to judge responsibility but everyone financial situation and life events are not the same and should not be calculated with a general equation. Some people lose jobs and are faced with misfortunes and are unable to make payments monthly. Credit scores are helpful but they don’t explain an individuals personal financial situation and credit worthiness.

  7. pdevay1 says:

    I recently tried to access my credit score for a school assignment and I was unable to. It was because my information wasn’t linking up for some reason. Regardless, I believe my credit score to be fairly good. I have had to take out student loans for two semesters but I have already payed the loans back in due time. I am aware that if I had started to fail to pay the loans back, after the 6 month post graduation grace period, then it would have started to negatively affect my credit score. I only have one credit card as well. It’s a card provided by parents that I only use for emergency situations and for gas as well. If there is a balance for the month by parents do pay it on time so I don’t have to worry about that. I’m sure my credit score will fluctuate more as I graduate and start my career but its good to know that I have it at a good starting point/score.

  8. Adale says:

    Fortunately, I have never had to take out a loan so I do not currently have a credit score. I believe as I start my career I will eventually take out a loan to pay for an apartment and a car. Eventually, I hope my credit score is good enough to purchase a house.

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