The Facts

Your credit score is based on information in your credit report, including loans and credit cards, the list of people or companies that have pulled your credit report in the past two years and any public records, such as bankruptcies, liens or defaults.

Significance

Lenders, landlords, insurers and even cell phone carriers may look at your credit score to determine if you are a good credit risk.

Benefits

Having a high credit score can qualify you not only for a loan but also for lower interest rates. According to Bankrate.com, a score of 760 or higher usually will get you the best interest rates on a mortgage, which can save you thousands of dollars over the life of the loan.

Considerations

Though your credit score is important, it is not the only factor lenders consider. They also may examine your employment situation, income level and other factors before deciding whether to issue you a loan and what your interest rate will be.

Misconceptions

Employers can check your credit report before hiring you and before considering you for a promotion. According to a survey conducted by the Society for Human Resource Management in 2006, 43 percent of the companies polled ran credit checks on at least some potential employees.

Source:

MSN Money: 5 People Who Check Your Credit

AARP: Homeowner's and Renter's Insurance

Bankrate: How Credit Scores Affect Mortgage Rates

More Information:

MSN.com: How Bad Credit Can Cost You a Job