Credit Score Basics
Credit scores are used to determine your credit risk. When you apply for credit in any form, lenders assess their risk in lending you the money by using your credit score to determine how you manage your credit.
There are three major credit bureaus that provide your credit scores: TransUnion, Experian and Equifax. Each credit bureau keeps information about you in a file and your score is based on the information they have about you. Your credit score will change as this information changes, either for the better or worse. Your goal should be to maintain a good credit score because your credit score from each of the main credit bureaus is used to determine not only if a lender will lend you money, but also what types of interest rate you'll get for the loan.
While it's a good idea to maintain a good credit score, one thing to remember is that your credit score is not about you being a good or bad customer. The purpose of the credit score is only to assess risk and each lender may view your credit rating differently depending on their own strategies used for determining whether or not to extend you credit. Additionally, lenders may use their own credit scoring system to evaluate their risk.
The best strategy regardless of how a lender assesses risk in loaning you money is to develop good credit management skills. By developing and using good credit management skills, you won't have to worry about your credit score.