Having a good credit
score is always important to consumers planning to apply for
a loan or to get or keep a good deal on a credit card, but that’s
especially the case in an uncertain economy. In difficult times,
lenders are pickier about the loans they make and who they lend
to, and that
means consumers can and should be more proactive in improving their
credit score.
First, what is a credit score? It’s a number calculated by a credit bureau, a lender or another
company to summarize each person’s financial reliability.
You also may hear a credit score referred
to as a “credit rating” or as a “FICO” score (a credit score produced by the Fair Isaac
Corporation).
In general, when it comes to borrowing money, the higher your credit score, the more likely
you are to get a loan or credit card with a low interest rate and low fees. But credit scores
also can be used for other purposes, such as when you apply for a job, rent an apartment or
obtain insurance.
How can you improve your credit score and get a better deal, especially in a turbulent economy?
Review your credit reports for incomplete or erroneous information and get it corrected. Credit
reports, produced by credit bureaus, detail each person’s financial history (such as how you pay
your bills or if you have filed for bankruptcy) and are used to develop credit scores. It’s
important to review your credit reports periodically — especially in the months before you make
a major purchase, such as a new home or car — to make sure that inaccurate information hasn’t
lowered your credit score.
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