What Is a Credit Score?

What Is a Credit Score?

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Think of your credit scores as you would a score on a test: A high score signals to a teacher that you’ve grasped the material and you’re likely to keep doing well in class. Similarly, a high credit score signals to a lender that you know how to use credit responsibly and you’re likely to pay back any money the lender extends to you. (Usually the lender will consider other things too, such as your income; nobody expects the score to tell the whole story.)

By the way, you may have several credit scores, since the various credit-reporting agencies and lenders generate their own using different models and criteria.

Knowing your credit scores—and what goes into them—gives you the power to ensure that your credit is in good shape before you need it.

Source: NY Times – Wirecutter
Keyword: What Is a Credit Score?

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