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Released: February 29, 2012
Help Desk FAQ
Credit Cards
What is a credit score and why is it important?
A credit score is an evaluation tool that reduces the information in your credit report to a three-digit number that helps lenders make quicker decisions. Credit scores help businesses predict which applicants are likely to repay loans. The better your credit report, and the credit score derived from it, the more likely it is that your credit application will be approved.
A credit score is important because whenever you apply for a mortgage or any other type of loan, a cell phone, a rental apartment, certain types of job, and sometimes even insurance or utilities, your credit score is used to determine whether you are financially trustworthy.
Currently, the only way to get a free credit score, which may or may not be the widely used FICO score, is if you apply for a loan and the lender shows it to you or you sign up for credit monitoring or similar subscription services.
Learn more about credit scores in Consumer Action’s Credit Reports and Credit Scores and on the Federal Trade Commission’s (FTC) website (here).
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