Credit score
A three-digit number that summarizes how likely you are to repay borrowed money, based on the information in your credit reports.
What it means
Lenders, landlords, insurers and others use credit scores to judge risk quickly. A scoring model, most commonly FICO or VantageScore, analyzes the data in a credit report, such as payment history, balances, account ages and recent applications, and produces a number. The most widely used base versions of both models run from 300 to 850, with higher scores meaning lower risk.
You do not have just one score. Each model has several versions, and the score depends on which credit bureau’s report is used, so numbers can differ slightly from one source to another. A higher score can mean easier approvals, lower interest rates and smaller deposits. The biggest drivers are paying on time and keeping balances low relative to limits.
Example
For example, two borrowers apply for the same car loan. The one with a score in the high 700s may be offered a noticeably lower APR than one with a score in the low 600s, which can mean paying hundreds or thousands of dollars less in interest over the loan.
How it’s used
- Applying for a credit card, mortgage or auto loan
- Renting an apartment or setting up utilities
- Tracking progress while rebuilding credit
Good to know
- Many banks and card providers show a free score; checking your own score does not hurt it.
Related terms
Educational information only, not financial, tax or legal advice. Rules, limits and rates change; check the IRS, your lender or plan, or a qualified professional before acting.