If you're new to the world of finance you'll find the term "credit score" tossed around a lot - especially in connection with home mortgages and loans.
You may have encountered this in the past when applying for a loan, or maybe you're applying to rent an apartment and realizing that the landlord is doing more than just a background check.
Whatever the case may be, a crash course on the term "credit score" is needed.
To start off with, your credit score is a number - the higher the number, the better rated you are.
But what are they rating, you might ask? In essence, you are being rated on your likelihood of defaulting (not being able to pay back money you owe), on a loan or other credit payment.
Let's say, for example, that you've had a credit card for the past five years, and you've made payments on time, every time.
You've also managed to restrain yourself from maxing out the card.
The agencies taking a look at your credit history would see that and say that you're a good candidate to loan money too.
Your risk for defaulting on a loan is low.
On the other hand, let's say you missed a few payments here or there, and have maxed out your line of credit.
Lending agencies are going to look at that and be a little more wary of lending to you.
In their minds, maybe they'll get their money back, and maybe they won't.
In any case, the best thing for you to do is to pay all your bills on time, every time, and to keep an eye on your credit score.
If it starts to go down, try to head trouble off at the pass by working to make it go back up again.