What is a credit score and why do I care about it?
A credit score is a reflection of your personal credit history. It is a measure that lenders use to determine the likelihood that you will pay back your loan and is part of the information that they use to determine whether to give you a loan. A credit score is not the same thing as a credit report.
The picture shows that FICO credit scores range from 350 to 850 (850 being a low risk to the lender) and how a lender may view these scores. Your individual credit score may be a different number from each of the credit bureaus (Equifax, Experian, TransUnion) because they each have different evaluation criteria.
It’s important to know your credit score because lenders use it when evaluating whether to give you a loan. If you want to purchase a house or a car using a loan and you have a low credit score, then lenders may give you a loan with a high interest rate in an attempt to hedge the risk that you will not repay your loan.
