Credit Score
A three-digit number lenders use to estimate how reliably you repay borrowed money.
What Credit Score means
A credit score is a numerical summary of your credit history. In the US, the most common versions range from 300 to 850. Lenders use it to decide whether to approve you for credit and at what interest rate. Scores are built from factors like payment history, how much of your available credit you use, the age of your accounts, and how often you apply for new credit. A higher score typically means better interest rates and more options.
Example
Two people borrow the same $25,000 auto loan. One has an excellent score and gets a 5% rate; the other has a fair score and gets 12%. The second payer could end up paying thousands more in interest on the identical car.
Disclaimer
Definitions are simplified for educational use and are not personalized financial, investment, tax or legal advice.