Have you ever wondered why you obtain the card with this very rate when your friend gets a lower rate, and how someone can be approved for a card in mere seconds? The answer is simple - it's a credit score that makes difference. It allows lenders to estimate their risks and decide whether you are creditworthy or not.

But a credit score is just a three-digit number. How can lending organizations base their decision on some number? Weird as it may sound, but a credit score, a single three-digit number, can determine your credit life for many years. Learn more about a credit score and how it affects your financial well-being!

A credit score is generated by a special formula based on the information in your credit profile. In other words, it's a numerical expression of your creditworthiness, of how likely you are to pay your credit bills. The higher your score, the better terms you will get on your loans.

At first glance, a credit score looks insignificant, but the truth is, this three-digit number is used extensively, and the rate you will see get on your loan will be directly related to your credit score - the higher your score you have, the lower your rate will be.

Generally, a credit score ranges from 300 to 850, though it's worth saying that there are only 10% of those whose credit is above 800, and you can hardly find someone whose score is 850. Anyway, there will be no difference between credit rates granted for 800 and 850 score points. However, there's a big difference between bad and good credit. And it really pays off to be a customer with a high score.

Back in the old days, a credit score was a closed book for customers. Oddly enough, it was believed that customers could change their spending patterns to boost their score. Besides, the information used for calculating credit scores was considered to be too complex for understanding.

These days, you can easily get your credit score by accessing special services. Actually, you can obtain it for free with your free copy of credit report. And that's really great as you can obtain your credit score whenever you need it, for instance before credit card application, or before applying for a car loan.

It's really important to know what your score is. First off, when knowing your credit score, you can pick the right plastic that suits your credit rating, and avoid choosing the card with less favorable terms. If you have just started building credit, you should pay close attention to how often a creditor reports your credit activity to credit bureaus. When building your credit score, try to be extra careful with handling your cards. By paying your bills on time and keeping your debts low, you've got good chances to boost your score and apply for best credit cards!