When applying for credit, lenders will check your credit score to see how good it is. But what exactly is a credit score; how is it calculated; and why is this number so darned important?
A credit score is a number that strongly indicates to lenders and creditors how likely you are to pay back the debt you owe, based on your past borrowing behavior. The higher your score, the more likely you are, in their eyes, that you will pay back the money you borrow.
Your credit score is used to determine whether you can get credit for things like: a credit card, a loan to finance your college tuition, a loan to buy a house or car, or even to start up a new business. Not only that, it is used to determine what kind of loan you qualify for, how much credit you qualify for and what your interest rate will be.