Want to buy a home, car or insurance, or looking for a mortgage? First, make sure you have a good credit score. There are people who might glance over it when they are in need, but the growing importance of credit scores have a significant role to play in one’s financial life. Credit scores cannot be ignored, as they also determine the interest rate one has to pay on credit cards.

Credit score determines credit worthiness

Experian, Transunion and Equifax are the three bureaus providing official scores gathered from the lenders. Each of these agencies provides free credit scores annually to individuals. A free credit check will make you more aware of your credit worthiness. Usually the lower limit of the score is 350 while the highest is 850. You need to have keen eye on your scores as you are weighted by lenders and scores are measured.

What can alter credit scores?

Late payments

Late payments have a bad impact on scores and will bring them down greatly. Payment history has a 35% role in calculating a credit score. So you should pay attention to making payments on time.

High amount on credit cards

You can ruin your score if you carry a high balance on your credit cards. Make sure that you never spend over 40% of your available balance, as large amounts hamper the debts utilization ratio. Charge only what you can pay monthly, as it can make the difference in your financial health.

Closing a credit line

You will risk your credit score when you wish to close a credit card line because of the hiking in interest rates. An increase in the debt utilization ratio is also observed when you close cards with a zero balance. Similarly, when you want to open a new credit card line, the company will check your scores.

Defaulting

Your dishonest treatment towards repayment can hamper your credit score. Short sales, bankruptcies, foreclosures, write-offs, etc. will leave a negative impact on the scores.

Credit lenders refer to your score, which is the foundation for determining how risky you are for lending money. With a bad credit image, lenders will either deny you any kind of monetary aid or charge you high interest rates.

So, keep a close watch on your credit score to make sure that everything is accurate. The advantage of a free credit score quarterly can be taken. But checking your score more often is more recommended than doing it quarterly.

Know your credit score free and track your score with credit monitoring. Get your credit check from the three credit bureaus and also check with a credit estimator to make big financial decisions at www.freecreditscore.com.