No Credit Score, No Dice

By John L. Fischer, Personal Finance Writer   

"You've gotta be in it to win it."

Even if you haven't heard that famous state lottery slogan before, it does relate directly to why you need a credit score.

What's my credit score used for?

Your credit score — that three-digit number that all lenders check — plays a big role in the house you buy, the car you drive and just about every other financial matter in between.

Let's try a quick analogy: Let's say you have tickets to a big-time sporting event or a sold-out rock 'n' roll show.

Sure, just making the scene is pretty cool, but is it likely that they'll seat you in the first few rows if your ticket says "general admission?"

Your credit score measures your overall financial rating — on everything

Things work very similarly in the credit world. If you want to buy a house (which requires a mortgage from a bank or lending institution), lenders can't say, "That guy looks like he'll pay everything back. Let's just approve his loan."

Instead, money lenders need an official merit system — a gauge that helps determine how much money you can borrow, and how much time you'll get to pay it back.

That's where your credit score comes in.

How can I find out my credit score?

The law entitles you to a free credit report each year from each of the major credit bureaus — but not a free credit score. You'll have to pay for that. (Some companies offer unlimited, "free" credit reports and credit scores for a monthly fee; just make sure you understand what you're paying for.)

And remember: A good credit score (somewhere above 680 these days) is a lot like that choice seat you waited in line for; anything less, and you may end up back in the cheap seats.