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Being judged by a number and not understanding what that number is for can be a terrifying prospect. But if you want to know more about that number, also known as your credit score, you can get the scoop with very little effort on your part.

So what exactly is a credit score, and why is it so important?

Basically, your credit score is tallied using a formula that scrutinizes your payment history, the total amounts you owe, the length of your credit history, the type of credit you are using, and any new credit you apply for. A formula is employed by the financial institutions to arrive at the big number, and this sum is listed by the three major credit bureaus (Experian, Equifax, and Trans Union). Your credit score then becomes the number which establishes your risk factor in terms of loans and other financial matters.

What most people don’t understand is how many things in their life are guided by their credit score, such as:

1. Finding a Home

- Obtaining a mortgage

can go much more smoothly if you have a good credit score. But did you know that your landlord can also use your credit rating to help him come to the conclusion that you will be a good tenant? He will want to ascertain that you pay your bills regularly and on time, among other things.

2. Getting a Car

- Just like securing a mortgage, purchasing a car with a car loan requires you to have a good credit score. Otherwise, you may lose the opportunity to have that dream ride.

3. Starting or Expanding a Business

- Any business, big or small, has to have capital, and it is normal to try start or expand one by obtaining a loan from a bank or other financial institutions. Guess what they’ll use to find out if they’ll give you that much needed capital? Your credit rating, of course.

Are you starting to catch on to the theme here? Here are two more seemingly unlikely things that are guided by your credit score:

4. Finding a Job

- It may seem unnecessary to you that your prospective employer may want to get an idea of what your credit score, but many do. Why? Well, some hiring managers may view your money troubles as a sign that you are irresponsible and unreliable, regardless of how skilled or well-trained you are at your job.

5. Other Products and Services

- Necessities such as electricity, water, and other utilities need to be paid monthly, and so these companies will want to check your credit score out to see what kind of client you are. This list includes services such as cable, internet, and cellphone accounts. Of course, the application of this is typically seen when you hope to be approved for a credit card. Most of all, your credit score is used as the basis for approving or denying your application, as well as your credit limit, if you do get a credit card.