Students with the highest SAT and ACT scores get their choice of the most prestigious colleges. Lending institutions aren’t so different - consumers with the highest credit scores get their choice of the best borrowing opportunities and lowest interest rates.

Shopping around for the best lender becomes even more important when your score may not be as attractive as it could be. You may, for instance, find that you’re offered what is known as a sub-prime loan, because your current risk profile makes you a high risk. With more flexibility stemming from loose credit, lenders may say yes to a loan, but at a higher - or sub-prime - cost. (In a time of tight credit, you might not qualify for a loan at all.)

My dictionary says that a sub-prime loan is “a loan that is offered at a rate above prime to individuals who do not qualify for prime rates.” Wasn’t that a big help? My own definition is this: A sub-prime loan is an expensive loan that you don’t want if you have any choice in the matter.

Do a credit check and make sure there are no mistakes.

The concept works basically the same in any lending situation. What impact would these scores have on a new car loan? A 60-month interest rate almost triples for the 619 score versus the 720 score! Get free credit report today!

All of this information is based on what you did yesterday, last year, maybe even ten years ago. Do something unpleasant while you have a variable-rate line of credit outstanding, and it will take your breath away. Got a low interest rate on your credit card? Carrying a high balance because the rate is low? Go ahead, miss a payment or two and watch the rate climb to the mid- to upper 20s  -  percent, that is! After all, you made a mistake. So it’s makeup time for the lender.

You think that getting your rate hiked for a minor infraction is unfair? That’s not the end of it. Under the policy of universal default if you have an issue with one lender, all your lenders can hike your rates as well. Yes, even though you’re still paying the others on time and as agreed! In fact, some companies even use a deteriorated credit score as reason to escalate your rates to the penalty level.

Yep. Even though you’re paying that loan on time, a change in your credit score (perhaps from too many account inquiries or closing some old accounts) gives the creditor that has a universal default policy full rein to hike up your interest rates. All the more reason to pay all bills on time and keep track of your credit report and credit score on a regular basis.