Credit scores are numerical representations of a person's creditworthiness, which lenders use to assess the risk of lending money. A higher score indicates better creditworthiness, while a lower score suggests higher risk.
How Credit Scores are Calculated
Credit scores are calculated based on several factors, including payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries. Each of these factors contributes to the overall score, which typically ranges from 300 to 850.
"Your credit score is your financial reputation."
Why Credit Scores Matter
Having a good credit score can lead to lower interest rates on loans and credit cards, better insurance premiums, and even improved job prospects. It's essential to monitor your credit score regularly and take steps to improve it if necessary.
