Your credit score is nothing but a three-digit number but how high it is absolutely crucial to your financial well-being. It is an indicator of other's people's faith in you that you can be prosperous and pay your bills as well as a predictor of whether or not you are likely to default on a loan or be likely to make a claim on an insurance policy!

Your credit score can have a tremendous impact on your pocketbook, your future and also your general peace of mind. If your credit score is not great it can cost you tens of thousands and even hundreds of thousands of extra dollars in your lifetime in the form of excess interest, fees and charges. Of course if this same money was invested over a lifetime, it could make you a millionaire rather than a slave to debtors who keep charging higher and higher interest rates the lower that your credit score falls.

Perhaps the best way to explain the long term consequences of mediocre or poor credit score is to give you an example that compares the way two different women have handled their credit over a life time. Let's take the example of two women - Joan and Kelly - who for the sake of our little example have led identical lives. Both women: - have exactly the same income - carry an annual balance of $8000 on their credit card every year - financed their cars after graduation with $20,000 car loans and replaced the vehicle every seven years until the age of 70. - Bought her first home with $350,000 mortgages at age 30 and then bought a new larger house that cost $450,000 at age 40 - Have never been turned down by a credit card company

After the reading the above examples you are probably wondering how one little three digit number can have such an impact on a person's life. Credit scoring is not new. It has been affecting our lives for the past several decades. By the late 1970s almost all major lenders were using credit-scoring formulas to assess a person's trustworthiness and financial situation. Before that were the good old days where you could practically talk your way into getting a loan from the local bank manager.