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When taking care of personal finance awareness of the situation with the credit score is very important. But not many people have enough information about which score is bad, which score is good and how it in general affects our lives. Credit rating has a serious impact on your mutual relations with such financial institutions like banks or insurance companies. The lower the meaning of your rating is the higher interest rate you will get when applying for a home loan, car loan or when simply using payday loans Canada.

Here is the question about how credit score is determined and who decides whether it is good or not. There are special agencies which collect information about you as a borrower from all the lenders you have dealt with. This means that when you take a loan the lender sends information about the amount of the loan, about all delays in loan repayments, about failures to cover the debt and bankruptcy cases if you run a business. Different agencies use various approaches to define a score. Thus FICO score may range from 300 to 850, VantageScore  from 500 to 900, VantageScore 3.0  from 300 to 850.

It is obvious as higher your score is as better it appears but lenders differently evaluate the meaning of your rating. While one credit union may reject your loan application because of poor credit score and high risk of insolvency another bank may consider the score sufficient to provide you with the necessary money on acceptable terms. This is lender who determines whether your rating is good or not and whether money would be given to you. Insurance companies also pay attention to your score when assigning the amount of interest and discount.

This is how the credit history may affect your financial life:
1. According to your score the lenders decide whether to give you a loan. You may not get the money if your score is too low as this is a big risk for the lender. On the average extremely low score is considered below the meaning of 620.
2. The interest rate which you will have to pay for a loan also partly depends on the credit score. The higher the risk for the lender not to get his money back on time is the higher interest you would be charged. You can get acceptable borrowing terms when having credit rating between 680 and 760. If the meaning of the score is more than 760 then you will get the most attractive deal.
3. Credit score also affects the amount of money which you may get from the lender. Although the conditions of obtaining a loan vary in different banks and individual lenders depending on the credit rating but the common rule is that the higher the rating is the more money you are able to get.
4. Good credit rating will bring you much benefit when signing a deal with an insurance company. Thus you will be able to get a good discount on the cost of the service.
5. The lender takes a decision about whether to reduce your credit limit or to close your account considering the value of your credit score.

Taking care of your credit history is an important task which will bring fruits in some challenging financial situations. If your score is bad it doesnt mean that the game is over. You are able to improve it but you just need to find more information about how to do it and to sweat it out.

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