A credit score, also known as a credit score, is a number calculated from the information in your credit report. This number represents your credit history and provides lenders, financial institutions, and other credit users with a quick measure of your credit risk—that is, the likelihood that you will meet your financial obligations.

Credit scores are used by lenders as a tool to assess risk before approving loans, credit cards or other forms of financing. The higher your credit score, the more likely you are to be considered a reliable borrower and be able to access better credit terms, such as lower interest rates.

Credit scores are usually in a specific range. In the United States, for example, the FICO score (a widely used credit scoring model) ranges from 300 to 850, where:

• 300-579: Poor
• 580-669: Fair
• 670-739: Good
• 740-799: Very Good
• 800-850: Excellent

The exact formula for calculating credit scores can vary depending on the scoring model used (e.g., FICO, VantageScore) and the credit reporting agency that provides the information. However, common factors that affect credit scores include:

• Payment history: If you have made your payments on time.
• Amount of debt: The amount of debt you have in relation to your credit limit.
• Credit history: How long you have had your credit accounts open.
• Account types: The diversity of your credit types (e.g., credit cards, mortgage loans).
• Recent credit applications: How many times you have recently applied for new credit.

Maintaining a good credit score is essential to accessing favorable financial opportunities, so it is important to understand it and take steps to improve it if necessary.