Credit Score

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What is a 'Credit Score'

A credit score is a statistically derived numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts. A credit score is based on, among other things, a person's past credit history. It is a number between 300 and 850 - the higher the number, the more creditworthy the person is deemed to be.

BREAKING DOWN 'Credit Score'

A FICO score is the most widely used credit scoring system. FICO is an acronym for Fair Isaac Corporation, the company that provides the credit score model to financial institutions. There are other providers of credit scoring systems as well. Consumers can typically keep their credit scores high by maintaining a long history of always paying their bills on time and not having too much debt.

A credit score plays a large role in a lender's decision to extend credit and under what terms. For example, borrowers with a credit score that is under 600 will be unable to receive a prime mortgage and will typically need to go to a subprime lender for a subprime mortgage, which will typically have a higher interest rate.

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RELATED FAQS
  1. What's the difference between a credit rating and a credit score?

    Learn about the differences between credit ratings and credit scores, and review how these expressions of creditworthiness ... Read Answer >>
  2. How is my credit score calculated?

    The credit score, commonly referred to as a FICO score, is a proprietary tool created by the Fair Isaac Corporation. This ... Read Answer >>
  3. Does a free credit report show your credit score?

    Find out how you can obtain your credit score, and find out whether your score is included in your free annual credit reports. Read Answer >>
  4. How does the number of credit card accounts I have affect my credit score?

    Your credit score, which is also referred to as your FICO score, is a measure that creditors use to assess your potential ... Read Answer >>
  5. What's more important to lenders, my credit score or my credit report?

    Find out why lenders care more about your credit report than your credit score and why you should care more about your credit ... Read Answer >>
  6. How can I increase my FICO score?

    Find out about a few simple, consistent ways to improve your credit score, including how to manage your credit card balances ... Read Answer >>
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