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Consumers have probably heard a lot of talk in the last few years about the importance of their credit scores in their everyday life, and it’s certainly true that little three-digit number can play a large role in a variety of situations.

Credit scores can be used to determine everything from eligibility for various lines of credit a consumer might seek, like a mortgage or even a credit card, as well as the ongoing interest rates and fees they might pay on such an account. But credit scores can have other impacts as well, as Nasdaq recently observed. For instance, insurance companies might use a credit score to determine the premiums consumers are required to pay for coverage, as studies have shown a correlation between higher risk and lower credit scores.

For this reason, it’s important that a consumer understand the value of keeping tabs on their credit report and credit score throughout the year. However, it’s essential to keep in mind that unlike a credit report, which consumers are allowed to access for free once per year from each of the three credit bureaus, credit scores typically cost money to see (you can monitor your credit standing for free with Credit.com’s Credit Report Card). Of course, the lower a consumer’s score is, the less likely they are to be approved for a line of credit. And while there are millions of people with credit scores strong enough to qualify for loans with competitive rates – usually around 750 of 850 – most consumers fall short of that mark.

For those who check their score and find that it’s low, there are a number of ways to improve it, but most will take time. The easiest way for borrowers to do this is to make sure they’re current on all outstanding balances, as payment history is among the most important factors in determining a credit score. However, if their balances are too high compared with their credit limits, they may face other problems, because credit utilization is another major factor.

Other issues, such as the average length they’ve had their accounts, the number of different account types they maintain and whether they’ve recently applied for several new lines of credit, are also important in determining a credit rating.

It’s also important to remember that that there are lots of different kinds of credit scores used for many different reason. Some scores are created for lenders, others are used by the credit bureaus. Some are used for mortgages, others are used for auto loans, and still others are educational score, used by regular people who want to better understand where they stand. It’s important to remember that different scores have different scales too.

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