A credit score is a figure roughly between 300 and 850 (some may be higher or lower). It is a numerical representation of an individual's ability to handle credit responsibly. In short, your credit score gives lenders a way to quickly judge the likelihood that you will repay a loan. A credit score is based on the information in your credit history and will change over time.
About FICO® Scores
Credit scores are often called “FICO scores.” FICO stands for Fair Isaac and Company, the company who developed the scoring system used in the U.S. The scores are generated through complex statistical models. The models analyze your credit history based on five categories: payment history, amount you owe, length of credit history, new credit, and credit mix. FICO scores are provided to lenders by the major credit reporting agencies.
Lenders use your credit score to determine whether to grant you credit, what interest rate to charge you, and the specific terms of your loan. Generally, if your score is below 700, you may still get credit, but at a higher rate. If your score is very low, given the lender’s criteria, you may not get credit at all.
It is important to review your credit score a few months before making a major purchase (i.e., car, home, etc.). If there are errors or changes you can make to increase your score, you have time before applying for the loan to make the changes and thereby increase your credit score.
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