Credit score

A credit score is a number that predicts how you will handle credit. Credit is money you borrow and pay back later. The score comes from the information in your credit reports.

A formula, called a scoring model, turns that information into the score. It looks at your bill-paying history and your unpaid debt. It also looks at how long your accounts have been open and how much of your credit you use.

You do not have just one score. It can differ by the model, the data and even the day it is calculated. Most credit scores are between 300 and 850.

Why it matters

Companies use your credit score to decide whether to give you a credit card, a car loan or a home loan. They also use it to set your interest rate and how much you can borrow. Landlords and insurers may use it too. A higher score usually makes a loan easier to get and its rate lower.

A worked example

Mai and Tuan each ask for a car loan. Mai's score is 780, and Tuan's is 600. Mai is more likely to get the loan at a lower rate. Lenders do not all offer the same rate, so both can still compare offers.