Home Money What is a Credit Score?

What is a Credit Score?

This post may contain affiliate links. As an Amazon Associate, I earn from qualifying purchases.

Your credit score is simply a number generated algorithmically that is used by the credit card companies to evaluate your likelihood of being able to repay debt. There are several scoring models with FICO (the acronym is for Fair Isaac Company, the creator of this model) being one of the most popular, with VantageScore becoming more popular in recent years. In fact, several credit companies now give you access to your FICO score as part of the services they provide.

Credit scores typically range from 300-850, and a higher score indicates a much greater likelihood of repayment on behalf of the borrower.

What is my Credit Score based on?

Your credit score is a based on a combination of factors, listed in order of highest impact to lowest impact, these factors are: payment history, your credit utilization – how much credit you have used compared to how much you have available, whether you have any derogatory marks, your credit age, how many accounts you have, and how many credit inquiries you have.

Why is my Credit Score Important?

Your credit score is important because it is a tool used by banks when deciding to lend money or extend credit to an individual. The idea of the score is to make it easier for banks to evaluate when a customer is more likely to repay their debts. For example, someone with an 800 credit score has received this score because they have paid their bills on time and utilized credit responsibly (all their credit accounts are likely not maxed out) for a number of years; a bank in this instance would be more likely to extend credit to this person because of their good credit history.

How can I check my Credit Score for free?

Although you can request your credit report for free once a year from each credit bureau (through annualcreditreport.com), this service does not provide your credit score. Some credit cards allow you to see you credit score as part of the services they offer you; Discover is one card that has historically provided access to your FICO credit score. Likewise, if you have American Express, Citibank, Chase, or Bank of America credit cards you may be able to access your FICO score. In fact, some of these companies provide your FICO score on the monthly statements.

Want more information about credit scores? Feel free to comment or ask questions down below.


Please enter your comment!
Please enter your name here

Most Popular

Amazon has Overstock to help you save on items in all categories!

Amazon has overstock! Check out the variety of overstocked items on sale (some up to 67%)!

Brain Cells & Feeling Full

New research presented in the March publication of Cell Reports has identified a group of cells that physically change their shape only after you...

Do Health Apps Know a Little Too Much About You? How to stay safe

Cybersecurity is something we all take seriously, but  what about our beloved health apps and fitness wearables? You may...

Pumpkin Seed Oil for Bladder Health

You can find pumpkin spice flavoring in just about anything these days, and when we think of pumpkins, many of us focus on pumpkin...