The uses of credit scores

You may know what a credit score is by now but do you know where and how it is being used? Most people think that credit scores are only used by banks, lenders, credit card companies and other credit grantors.

That may be true but credit score is also used in many other things besides this. Let us help you find out the other uses of credit scores.

As most of us know by now, institutions that lend money use credit scoring as a way to assess if an applicant is financially responsible enough for them to trust and make sure to avoid losses due to bad debt. They also use this to determine what credit limits and interest rates to use. But do know that credit scoring is not only limited to them. Other organizations and even government departments use this system.

Service providers also use credit scoring to know whether or not they'll require security deposits, how much deposit to require or even what kind of payment plan a person can be eligible for. When we say service providers, we are pertaining to utility companies, phone companies, and even landlords.

Credit scores are at times required by some employers too. Some use it for background checking, likely to see if you are responsible. Of course, only with your permission that they are allowed to look into your credit score.

Insurers also use credit scores to help them decide if it is wise for them to provide coverage and what rates to use. However, they use a moderately different standard from lending scores.

So for whatever purpose you are thinking of using your credit score, it is always best to manage your finances and debts to ensure your credit score is in shape when you need it.