What is a credit score?

A credit score is a numerical representation of a person’s creditworthiness, based on their credit history. It typically ranges from 300 to 850, with higher scores indicating better credit risk. Lenders use this score to assess the likelihood that a borrower will repay loans on time. Key factors that influence a credit score include payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries. A higher score often results in better loan terms, lower interest rates, and higher chances of approval, while a lower score can make borrowing more difficult or expensive.