Credit Score
Definition
A numerical rating between 300 and 850 that represents a person's creditworthiness, based on their credit history and financial behavior.
A credit score is a three-digit number that lenders use to evaluate the risk of lending money to a borrower. FICO scores, the most widely used model, range from 300 to 850. A score above 740 is generally considered excellent, while below 580 is considered poor.
Five factors determine your credit score: payment history (35%), amounts owed or credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Payment history has the largest impact, meaning even one missed payment can significantly lower your score.
Your credit score affects interest rates on loans and credit cards, rental applications, insurance premiums, and even employment opportunities. Improving your score involves paying bills on time, keeping credit utilization below 30%, avoiding unnecessary new accounts, and monitoring your credit report for errors.
Related Calculators
Related Terms
FICO Score
financeThe most widely used credit scoring model developed by the Fair Isaac Corporation, ranging from 300 to 850.
Debt-to-Income Ratio (DTI)
financeThe percentage of your gross monthly income that goes toward paying monthly debt obligations, used by lenders to assess borrowing capacity.
Credit Score
financeA numerical rating between 300 and 850 that represents a person's creditworthiness, based on their credit history and financial behavior.
APR (Annual Percentage Rate)
financeThe yearly cost of borrowing money expressed as a percentage, including fees and interest charges.
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