Most of us need access to credit. Loans provide the means to buy a house, purchase reliable transportation, and pay for higher education. When you apply for credit, lenders use your credit score to determine the potential risk in lending to you: they want their money back with interest – the price you pay for borrowing the money.

Many people don’t realize credit scores are used for more than applying for credit cards and loans. Your number can be used in other ways, too:

  • Landlords may check your credit to decide whether to rent to you, or whether to require a higher security deposit. 
  • Cellular companies may use your credit to determine your payment plan and whether to require a security deposit.
  • Insurance companies check credit to decide how much risk you present. They can use your scores to determine whether to cover you and, in many states, to determine your premium.
  • Utility companies are interested in your credit score. If you have no credit or a low credit score, these companies may require a higher security deposit.
  • Credit card companies review your current scores to determine your interest rate.
  • Employers may check your credit to protect their customers, their other employees and their businesses. When a potential hire or an employee shows sign of financial distress, this could lead to fraud or theft. Employers don’t receive your credit score, however. Instead they can obtain a modified version of your credit report. They need your permission to do so.

The FICO® score, developed by Fair Isaac Corporation, is one commonly used credit scoring system. FICO scores range from 300 to 850. Many lenders consider a score in the 700s to be good. Your FICO score is comprised of five factors:

  • Payment history
  • Amounts owed
  • Length of credit history
  • New credit
  • Type of credit in use

It wasn’t that long ago when banks would review your full credit report and make an individual decision on whether to lend to you, how much, and at what interest rate. The use of credit scores makes extending credit quicker and easier. You can apply for a credit card online, and know within minutes whether you were approved.

Credit scores have automated the lending process and make it easier for companies to make decisions about you. They are used, not only by banks, but also by utility companies, cellular companies, insurers, and others who want to know the risk you present before offering you their service or product.

You can check your credit score for free at

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice.  Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.