Credit score Definition Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content

Credit score

Credit scores are a key financial concept you need to understand. Bankrate explains.

What is a credit score

A credit score is a number that represents a person’s creditworthiness. Credit scores are based on a variety of personal financial data. Higher credit scores correlate with better creditworthiness. Financial institutions judge people with higher credit scores to have lower , and grant them a broader selection of credit products at lower . Fair Issac Corp. (FICO) and VantageScore Solutions are the two leading U.S. credit scoring companies.

Deeper definition

Fair Isaac Corp. originated the concept of the credit score — what it calls a — in the 1950s. Fair Isaac’s insight was to offer financial institutions a view of the creditworthiness of their customers via a simple numerical grade, with 300 the lowest credit score and 850 the best. The company claims that 90 percent of top U.S. lenders use FICO scores to make their decisions. VantageScore Solutions is a joint venture between three leading : , Experian, and . Each borrower’s VantageScore credit score is generated using information about credit payment history (35 percent of the weighting), total debt load (30 percent of the score), length of credit history (15 percent), new credit (10 percent), and mix of credit, such as revolving credit or fixed-payment loans like a car payment (10 percent). Different lenders have different needs for information about the credit risk and creditworthiness of their customers. Credit bureaus issue different credit scores using only certain aspects of a person’s financial history to evaluate risks for specific needs, such as a or mortgage lender. Companies like Fair Isaac and VantageScore Solutions offer more than one score for you. A credit score can change on a regular basis as people pay down a credit cards, pay off loans, and open new lines of credit. People who want to track their credit scores often sign up for credit reporting services; some of these services update credit scores monthly, while others update them more frequently.

Credit score examples

FICO scores and VantageScores range from excellent to very poor: Excellent: FICO = 800-850; VantageScore = 750-850 Very good: FICO = 740-799 Good: FICO = 670-739; VantageScore = 700-749 Fair: FICO = 580-669; VantageScore = 650-699 Poor: VantageScore = 550-649 Very poor: FICO = 300-579; VantageScore = 300-549 Want a better credit score? Pay down your debt. , then plan your payoff strategy.

More From Bankrate

Wondering how to protect your data from identity thieves? Check out these steps. With inflation making your bills even higher, here are a few ways to bring in cash. Americans were also more likely to blame Washington policymakers than credit them. These seven products can help protect you and your money from cybercrime. Holiday travel will be pricey this year, but Bankrate has tips on how to save. Here are steps you can take to establish your independence after financial abuse and help ensure long-term financial health. Selecting the right lawyer can mean the difference between eventual rebound and long-term pain. Financial therapists merge financial planning with mental health care. Weigh the pros and cons to decide if debt consolidation is right for your situation.