Credit Score

Search Dictionary

Definition of 'Credit Score'

A credit score is a numerical rating used by lenders and financial institutions to evaluate a borrower's creditworthiness. It is based on the borrower's credit history and reflects their likelihood of repaying loans or other debts on time.

Credit scores are typically calculated by credit reporting agencies using information from credit reports, which track an individual's history of borrowing and repaying money. Factors that can impact a credit score include payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries.

Credit scores range from 300 to 850, with higher scores indicating a better credit history and lower risk of default. A good credit score can help borrowers access loans and credit cards with more favorable terms, while a poor credit score can make it more difficult to qualify for credit or result in higher interest rates and fees.

It's important to monitor your credit score regularly and take steps to improve it if necessary. This may include paying bills on time, reducing credit card balances, and checking credit reports for errors or inaccuracies.

There are three major credit reporting companies in the United States: Equifax, Experian, and TransUnion. These companies collect and maintain credit information on millions of consumers and businesses, including credit history, payment history, outstanding debts, and public records such as bankruptcies or foreclosures.

Credit scores are calculated based on the information in these credit reports. Each of the credit reporting companies uses a slightly different method to calculate credit scores, but the most common scoring model is the FICO score, which was developed by the Fair Isaac Corporation. FICO scores range from 300 to 850, with higher scores indicating better creditworthiness.

Consumers can access their credit reports and credit scores from each of the three major credit reporting companies for free once per year at They can also purchase credit monitoring services or obtain their credit scores from other sources such as credit card companies or financial institutions.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.