Credit Score


DEFINITION of 'Credit Score'

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.


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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.

  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Credit Criteria

    The various financial characteristics that lenders analyze when ...
  3. Credit History

    A record of a consumer's ability to repay debts and demonstrated ...
  4. Conforming Loan

    A mortgage that is equal to or less than the dollar amount established ...
  5. Credit Report

    A detailed report of an individual's credit history prepared ...
  6. Credit Bureau

    An agency that researches and collects individual credit information ...
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  1. Can a Best Buy credit card help you build credit?

    A Best Buy credit card can be used to help improve your credit score and credit history as long as you use the card responsibly. ... Read Full Answer >>
  2. Do banks offer FHA loans?

    Many major U.S. banks, including Well Fargo & Company, U.S. Bancorp, Bank of America and Flagstar Bancorp, offer Federal ... Read Full Answer >>
  3. Are personal loans bad for your credit score?

    Taking out a personal loan is not bad for your credit score in and of itself. However, there are several factors that come ... Read Full Answer >>
  4. Is credit counseling as damaging as bankruptcy on my credit report?

    Credit counseling is not as damaging as bankruptcy to your credit report. Credit counseling ends up being noted on your credit ... Read Full Answer >>
  5. Why is it beneficial to innovate financial models and techniques used in quantitative ...

    The majority of consumers use credit cards at some point during their lifetimes to finance major purchases, earn rewards ... Read Full Answer >>
  6. How does your checking account affect your credit score?

    Your credit report provides a snapshot for prospective lenders, landlords and employers of how you handle credit. For any ... Read Full Answer >>
  7. What do the letters / symbols on credit ratings mean?

    The letters or numbers used to express a credit rating or credit score express the creditworthiness of the individual, business ... Read Full Answer >>
  8. What are the differences between the three national credit bureaus?

    There are several different credit bureaus but only three that are of major national significance: Equifax, Experian and ... Read Full Answer >>
  9. What's the difference between debt consolidation and debt settlement?

    Debt consolidation and debt settlement are both financial strategies for improving personal debt load, but they function ... Read Full Answer >>
  10. What's the difference between a credit rating and a credit score?

    Although credit rating and credit score may be used interchangeably in some cases, there is a distinction between these two ... Read Full Answer >>
  11. How long does it take for items to show up on my credit report?

    Normal information, such as a paid or unpaid notation, usually hits a credit report within 30 days of the close of the billing ... Read Full Answer >>
  12. What is a good credit utilization ratio?

    Your credit utilization rate is a representation of the percentage of your current borrowing ability being used; basically ... Read Full Answer >>
  13. What information do lenders need when I apply for a credit limit increase?

    Depending on the credit increase amount that is requested and the length of time the borrower has held the line of credit, ... Read Full Answer >>
  14. Do I need to know all three of my credit scores?

    Credit information is often not reported with the same accuracy across all three credit bureaus, so it is important for consumers ... Read Full Answer >>
  15. Why don't I have a credit score?

    Not having a credit score usually means there is no credit history for the credit bureaus to assess. Having no credit score ... Read Full Answer >>
  16. Does cosigning a loan affect a credit score?

    Cosigning for a loan does not affect a credit score unless the other person defaults on the loan and the cosignor does not ... Read Full Answer >>
  17. How often is my credit score updated?

    A consumer's credit score usually updates at least once every 30 to 45 days, and in some cases almost daily, depending on ... Read Full Answer >>
  18. Does marrying someone with bad credit affect my credit score?

    A credit rating is an assessment of an individual's creditworthiness. This evaluation is based on an individual's history ... Read Full Answer >>

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