Your credit score is more important than you may realize. Until the time comes that the credit score determines whether they can buy a house or a car, most people never even think about their credit rating. Now that we realize that it is important, what exactly goes into deciding what it should be? Basically, your credit rating is your credit performance reduced to a single number that indicates how responsible a borrower you are.

Lenders use this number to calculate how much of a risk they are taking when they loan you money. There are several different things that are taken into account when your credit score is decided. Above everything else, your ability to pay your monthly statements on time is the most important factor of your credit rating. If you are habitually late, your credit rating will drop quite a bit, but your score can take a hit from as little as a single late payment. It does not matter if all that you can afford to pay each month is the absolute minimum. If you want to maintain or improve your credit rating, you absolutely cannot miss a payment. » Read more: How Do Banks Determine Your Credit Rating?

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