A credit score is a number that represents a person’s creditworthiness. It’s used by lenders and others to predict whether a person will make their payments on time. Credit scores are important because the higher the score, the more likely you will be approved for credit. Those with high credit scores are often eligible for lower interest rates on new credit. What exactly is a “good” credit score? FICO scores range from 300-850, but most people score in the 600s and 700s. Lenders typically consider credit scores above 700 to be good. For those that have FICO scores below 620, they’re usually considered high risk by some lenders. As a result they may be required to pay higher interest rates. A low credit score may also cause a person to be turned down for credit completely.

Each credit reporting agency has its own methods for determining a credit score, so you’ll have more than one and they might not be the same. Regardless of where the score comes from, each is derived from a person’s payment history, how much that person owes, the length of their credit history, and how much new credit has been opened and the types of credit used. More weight is given to your payment history and how much of your available credit you’re using.