Understanding Credit Scores
A credit score is a numerical representation of how much risk a financial institution associates with lending money or extending credit to an individual.
Scores range from 300 to 850 and are based on an individual’s credit history. Included are bill-paying history, amount owed versus available credit, length of credit history, amount of new credit, types of credit, and other factors.
Those with higher scores are considered lower risks and thus are offered better terms, including lower interest rates. Those with lower scores are considered higher risks and are offered less attractive terms or may be denied outright on a loan application.