One, it isn’t a number that impacts your daily routines — like your bank account balance or your weight. So, it becomes easy to neglect.

Two, there are plenty of myths about credit scores. Some people falsely believe that by checking their credit scores, they run the risk of lowering them. This is a complete myth and needs to be put down. When you check your credit score, you're making a soft inquiry, which in no way impacts your credit ratings and the score.

Higher credit scores generally receive more favourable credit terms, which may translate into lower payments and less interest paid over the life of the account.

Remember, though, that everyone’s financial situation is unique. Individual lenders may also have their own criteria when it comes to granting credit, which may include information such as your income.

The types of credit scores used by lenders and creditors may vary based on their industry. For example, if you’re buying a car, an auto lender might use a credit score that places more emphasis on your payment history when it comes to auto loans.

Credit scores may also vary according to the scoring model used and which CRA furnishes the credit report. That's because not all creditors report to all three nationwide CRAs. Some may report to only two, one or none at all. In addition, lenders may use a blended credit score from the three nationwide CRAs.

Now that we've cleared the air let's take a look at the reasons,

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Why Decoding Your Credit Score Matters

It helps You Know Where You Stand

Your credit score is an indicator of your overall financial health. Just like you keep a tab on your weight, blood sugar levels, and BP to monitor your physical health, you need to check your credit score to keep your financial health in control.

Irrespective of whether the number is poor or good, you need to know it. The good news is that — once you know where you stand, you can take the right steps to improve it.

It Helps You Boost and Maintain Your Score Over Time

Remember, in school and colleges, you would study the entire syllabus on the eve of the exam and ace it? Well, credit scores don't work that way.

You cannot boost your credit numbers overnight. It takes months and even years to build the numbers. By decoding your credit score, you can take the right steps to boost it gradually.

Helps You Rectify Errors

By decoding your credit score, you can find out whether your credit reports are accurate. For instance, you may have paid off a loan, but if your credit report doesn't reflect it, your poor credit numbers may be the reason.
By tracking and monitoring your credit score, you keep your credit reports accurate and up to date.

Helps You Land Better Deals

This is one of the biggest reasons to monitor and track your credit score. When you know your credit score, it gives you the upper hand in your negotiations with lenders. Lenders often offer lowered interest rates to people with higher credit scores.
Knowing your credit scores can be a trump card in your negotiations while applying for a loan or credit card. Even a 1% reduction in the interest rate could significantly reduce your loan burden.

Conclusion

Your credit score is a number that can significantly impact your financial life. If you have a good credit score, you are more likely to qualify for loans and get better terms that can save you money. Learning what your credit score is and what goes into calculating it can help you improve it.