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Your
credit rating is a type of "report card" that
is maintained by
credit bureaus or credit reporting agencies as
they are commonly called. These credit reporting
agencies collect loan balance and payment
information from lenders who have agreed to report
your financial performance.
Your credit rating reflects how much debt you are
carrying and how well or poorly you keep up with
you payment obligations. Lenders use the
information that makes up your credit rating to
determine whether or not they will extend you
credit or approve a loan.
In order to make the decision process as easy as
possible for lenders, credit reporting agencies
use a score known as the FICO Score to determine
your credit risk and the likelihood that you will
repay your debt.
It has become increasingly more common for
employers, insurance companies and landlords to
also depend upon your FICO score when making a
determination about whether or not they are
willing to hire you, issue insurance to you, or
rent you a home or apartment. That's why it is so
important for you to maintain good credit rating
in today's economy where computers make decisions
about you without humans even being involved.
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