What is a credit score you may be asking? Your credit score is a record of your loans and is taken into consideration when you want to take out a cell phone contract, open an account at your favourite fashion store as well as when you apply for a loan to buy a house or car.  In fact, some employers (like banks) even double check your credit score before they offer you employment, because if you can’t manage your own money well, how will you manage other peoples money?

How does it work?

As mentioned above, a credit record is a historical overview of how someone who has borrowed money repays that money – i.e. it is a reflection of how quickly and efficiently you pay back your debt. It consists of information supplied by banks, credit card companies, short-term loan suppliers, collection agencies and even the government.

Credit scores can range between 0 and 999. The higher your score, the lower the lending risk associated with your profile, and the better payer you are seen to be. On the other hand, the lower your credit score, the riskier you seem so people will be less likely to lend you money.

How can I find out my credit score?

You can find out what your credit score by getting a credit report which will include information from Transunion, XDS, Experian and possibly Compuscan. MoneyShop has a short and simple online credit report system that will pull the information for you and the best thing is, is that it is for FREE.

Should I care about my credit report?

The simple answer is yes; you should care a lot. Companies decide how much money to lend to you and at what interest rate based on how high or low your credit score is. In other words, if you have a shabby credit score, your bank may decide to only give you half of the loan you asked for to buy your first flat and at a much higher interest rate too, because they are scared that they may struggle getting their money back – leaving you in a bit of a pickle.

For these and many other reasons it is important to know your credit score.  Once you know how you rank you can learn more about improving your score too.

If your score isn’t looking too healthy, this is the perfect opportunity to take some time and identify what the problem is. Plan your finances and pay your dues, even if you make special arrangements to pay smaller amounts over a longer period, but make sure you up your score in whichever way you can as it will help you a great deal in the long run.