Credit history is important when you want to get a loan, such as an auto loan or buying a home. Some companies check your credit score when you apply for a job. Banks and credit unions look at a person’s credit history to determine if the person has the ability to pay the money back. In short, a credit rating is a score. Everyone who has ever had a loan or used a credit card in the United States has a credit score. If the score is high, the business providing the loan or offering the credit cards feels very confident that the money will be paid back and will give you a low interest rate. If the score is low, you may not be able to purchase the car or home, or if you are able to do so, your interest rate will be very high. Most credit scores are between 400 and 800. If your credit score is good, for example, 650 or higher, you will likely get a loan with a good interest rate. If your score is low, for example below 650, you may not get the loan, or if you do, your interest rate will be high.
There are three companies in the United States that give credit scores. So if you have a credit card or loan somewhere, you have three different scores. It is important to have a good credit score. Every time someone is late making a payment, such as a car payment, or does not want to pay their credit card bill, the score goes down. When you open your account at a bank or credit union, ask them about your credit score and what you can do to keep the score high.