<p style="text-align: justify;">A <a href="https://newsforpublic.com/financial-mishaps-damage-credit-score/">credit score</a> is the most used indicator of someone’s financial responsibility. Your score is determined by a variety of factors and can vary depending on who is reporting it. The three major credit reporting agencies are Equifax, Experian, and TransUnion. Common factors used to calculate your score include repayment history, length, and variety of credit, percentage of credit being used, and the number of recent credit checks on your account.</p>
<p style="text-align: justify;">Companies will run a <a href="https://www.creditsesame.com/free-credit-score/" target="_blank" rel="noopener">credit check</a> for a variety of reasons. There are two types of checks, also known as inquiries. A hard inquiry will give a complete picture of your history and is attached to an application for credit. Your credit score can take a hit if you have too many hard inquiries. Typically, you need to provide permission for a hard inquiry to occur. A soft inquiry is used for <a href="https://newsforpublic.com/criminal-background-checks-a-crucial-pre-employment-screening-test/">background checks</a> or prequalification and is not tied to a credit application. Soft inquiries will not negatively impact your credit score.</p>
<h2 style="text-align: justify;">Common Hard Inquiries</h2>
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<h3 style="text-align: justify;">Applying for a Loan</h3>
<p style="text-align: justify;">When you are applying for a line of credit, the lender will run a credit check. Examples can include a mortgage, automobile loan, personal loan, or student loan. The lender is taking a risk by granting you a loan and needs to see if you have paid as agreed with past credit. A higher credit score can improve the interest rate they are willing to offer.</p>
<h3 style="text-align: justify;">Requesting a Line of Credit</h3>
<p style="text-align: justify;">Credit card companies will most certainly want to review your credit history before issuing you a line of credit. Your score can affect how much credit they are willing to extend and at what interest rate. If you do not have a credit score, applying for a credit card is an easy way to establish one.</p>
<h3 style="text-align: justify;">Shopping for Insurance</h3>
<p style="text-align: justify;">Evidence has shown that a client with a lower credit score is more likely to file a claim. Insurance companies will pull your credit to see what kind of risk they are taking and determine what premium to charge. If you have a poor credit score, you could pay double the premium as someone with good credit.</p>
<h3 style="text-align: justify;">Signing a Lease</h3>
<p style="text-align: justify;">Landlords are extremely interested in knowing how you have handled past debt. It is an indicator of whether you will pay rent on time. The score itself might not be the determining factor, but rather if you have met your past obligations as agreed.</p>
<h2 style="text-align: justify;">Common Soft Inquiries</h2>
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<h3 style="text-align: justify;">Checking Your Score</h3>
<p style="text-align: justify;">You have the right to receive a free copy of your credit report annually from the three major reporting agencies. There are also several other ways to monitor your score regularly. It is a good idea to review it at least annually and make sure you agree with what you see. You can dispute something if it looks incorrect. It’s also good to know where you stand before meeting with a potential lender.</p>
<h3 style="text-align: justify;">Employment Verifications</h3>
<p style="text-align: justify;">A potential employer is looking for red flags on your credit report, especially if you will be managing finances for them. If you struggle to manage your personal finances, they may not want you working for them.</p>
<h3 style="text-align: justify;">Prequalification Offers</h3>
<p style="text-align: justify;">Credit card and insurance companies will often try to prequalify someone to entice them to sign up or buy insurance. This is more of an informal process to loosely determine your creditworthiness. As you progress in the application process, a hard inquiry may need to be run.</p>
<p style="text-align: justify;">Understanding your credit score and keeping it in good standing is important early in adulthood. A good credit score can save you a lot of money throughout your life.</p>

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