What Is a Credit Score?
A credit score is a number that lenders use to determine a borrower’s creditworthiness. A good credit score means a lower chance of being approved for a loan, while a bad credit score means a higher chance of being approved.
There are three main factors that affect a credit score: your credit history, your credit utilization ratio, and your credit score history. Your credit history includes information about the payments you’ve made on your credit cards, loans, and other types of debts. Your credit utilization ratio is the percentage of your available credit that you’re using. Your credit score history includes information about the credit scores of the accounts you’ve applied for and the terms of those loans.
Credit scores are important because they are one factor in a credit evaluation. A good credit score means that you are a low-risk borrower and that lenders are more likely to give you a loan. A bad credit score means that you are a high-risk borrower and that lenders are more likely to charge you high interest rates and refuse to give you a loan.
