There are several ways that your credit rating impacts your finances, so it is very important to maintain the best score that you can. A new study showed that a whopping 76% of personal loan applicants are denied. Among the people who do get approved for loans, 35% of them reject the loan because the interest rate or loan amount is not what they want. Presumably this is because their credit rating wasn’t good enough for the best loan terms.
Getting a personal loan comes down to creditworthiness and the average American’s credit score is 687. This is well below the average 741 FICO score of those getting approved for personal loans.
Although states have differing regulations on what your credit score can be used for, it is commonly used in decision-making for:
- Loans and mortgages
- Insurance rates
- Apartment rental
- Employment screening
- Car lease rate
- Utility services
Some banks and credit card companies provide your credit score for free. The four ratings agencies (Esperion, TransUnion, Equifax, and Innovis) also offer your credit score for free, once a year. If you have average or poor credit (under 750), you may take steps to improve it from many online resources, books, and courses.