A credit score is a numerical representation of a person’s creditworthiness, based on their credit history. It helps lenders determine the likelihood that you will repay borrowed money. The score typically ranges from 300 to 850, with higher scores indicating lower risk for lenders.
There are several factors that influence your credit score:
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Payment history (35%) – Whether you’ve paid your bills on time.
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Credit utilization (30%) – The amount of credit you’re using compared to your total available credit.
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Length of credit history (15%) – How long you’ve had credit accounts.
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Types of credit used (10%) – A mix of credit types, such as credit cards, loans, etc.
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Recent inquiries (10%) – The number of recent credit inquiries (too many can indicate financial trouble).
Credit scores are typically used by banks, credit card companies, and other lenders to decide if you qualify for a loan, a credit card, or even a rental lease, and what interest rate you’ll get.