What is a credit score?
2 answers
@tess.kassulke
A credit score is a numerical representation of an individual's creditworthiness, indicating the likelihood of repaying debts and managing credit responsibly. It is calculated based on various factors such as payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. Lenders and financial institutions use credit scores to assess the risk of lending money or extending credit to an individual. A higher credit score generally indicates a lower risk borrower, making it easier to secure loans or obtain favorable interest rates.
@tess.kassulke
A credit score typically ranges from 300 to 850, with higher scores being more favorable. The most commonly used credit scoring model is the FICO score, developed by the Fair Isaac Corporation. Other credit scoring models include VantageScore and TransUnion Credit Vision. It is important for individuals to monitor and maintain a good credit score by paying bills on time, keeping credit card balances low, and avoiding excessive credit applications.