A credit score is a three-digit number based on a borrower’s bill-paying history. This represents a debt profile and statistical information on borrowers that lenders use to determine the likelihood of certain credit behaviors, such as whether you will pay money back on time.

Your credit score is key information that you need to have a complete understanding of. Your credit score will have an important impact on the interest rates you’ll pay when borrowing money. Knowing your credit score allows you to question the accuracy of the score and to negotiate the best rates with lenders. A credit score is not included in a consumer credit report and must be purchased separately.

Credit scores are also being used for purposes other than determining whether you will default on a loan or make late payments. For example, some insurers are using low credit scores, as indicators to identify individuals they believe are more likely to make claims against their insurance policies. These insurance companies maintain that there is a correlation between poor credit and filing multiple insurance claims. An accurate credit score can make the difference not only in interest rates charged on loans or credit cards, but also on the availability and cost of insurance, an already high price essential for most families.