The use of credit is crucial in the US economy. It keeps businesses and individual solvent by not having to strictly deal with cash. There are many reasons why people use credit: to buy a home, to buy a car or even to rent a home or to rent a car. There are many numbers of reasons why individuals make purchases by taking out loans. However, not all people are able to get loans. Some individuals are deemed to be not creditworthy, thus lenders have decided that this specific person would likely not be able to repay the loan.

So why are some people deemed worthy of credit while others are deemed not worthy? Their individual credit scores provide the answer. An individual’s credit score is an indicator of how likely he or she is able to repay a loan and thus indicates who will get a loan. An individual with a high credit score is more likely to get credit approval. The keepers of the valued credit score are three major credit-reporting agencies and they calculate scores based upon: on time record of loan repayments, outstanding credit balance ratio to total credit limit, etc.

Clearly having a good credit score is paramount since it determines an individual’s likelihood of getting credit. An individual will find it extremely difficult to get a loan from a bank with a poor credit score. Consequently, having a low score will preclude a person from purchasing a new home or starting a business, both of which require a loan. In the event a person with poor credit can get a loan, the terms will not be as favorable as a market rate loan. For example, the interest rates will probably be higher.

One overlooked reason why a good credit score is important, relates to getting employment. Believe it or not but a large number of employers check their prospective employees credit scores. Employers feel that those prospective job applicants who have a good credit score are more reliable then their counterparts with poor scores, because they pay their bills on time and handle money well.

Having a good credit score is very important because credit is an integral part of the present day culture and one’s credit score is revealing of one’s character. Everyone should do his or her best to maintain as high a credit score as is possible, and carefully examine their credit report to make sure no one tries to damage their score in any manner.