A credit score is a numerical representation of a person’s creditworthiness, determined by their credit history and various other factors. Typically ranging from 300 to 850, a higher credit score enhances one’s chances of securing loans from lenders. Credit scores play a pivotal role in loan approval, whether for credit cards or personal loans. Among the widely recognized credit scoring models, the Fair Isaac Corporation (FICO) score stands out.

Lenders heavily rely on credit scores to gauge an individual’s financial reliability before lending money. A credit score of 600 or above is generally considered good, increasing the likelihood of loan approval.

The creation of credit scores, pioneered by the FICO score, streamlines the lending process. It spares lenders from manually scrutinizing complete credit reports, which can be time-consuming and prone to errors. By using credit scores, potential misjudgments and inaccuracies can be minimized.

A person’s credit score evolves over time based on loan repayment behavior and updates from creditors. Credit bureaus provide these updated scores, which may vary slightly depending on the credit reporting agency due to differing credit information updates.