Credit & Debt

What is Credit Score?

A credit score is a three-digit number from 300 to 850 that predicts how likely you are to repay borrowed money. The three major credit bureaus—Equifax, Experian, and TransUnion—collect your borrowing history, and scoring models use that data to calculate your score. Lenders use it to set your interest rates and terms on loans, credit cards, and insurance.

The two main scoring models are FICO and VantageScore. Both use a 300 to 850 scale. Higher scores mean lower risk, which translates to lower interest rates and better terms.

Under FTC and CFPB rules, scoring models can't use discriminatory factors. You have the right to check your credit reports and dispute errors that hurt your score. Regular monitoring helps catch identity theft or reporting mistakes early.

Quick Facts

Standard Score Range300 to 850 points

Primary Scoring ModelsFICO and VantageScore

Primary BureausEquifax, Experian, and TransUnion

Impact of High ScoreSecures lower interest rates and higher limits

PRACTICAL EXAMPLE

A consumer with an 800 credit score applies for a $300,000 mortgage and qualifies for a 6.0% interest rate. Another applicant with a 620 credit score applies for the same loan and receives a 7.5% interest rate. The higher interest rate costs the second applicant an extra $300 per month and over $100,000 more in interest over 30 years.

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RELATED TERMS

Learn More Key Concepts

Credit ReportA record of your borrowing history, including accounts, payments, and public records.

FICO ScoreThe primary credit scoring brand developed by Fair Isaac Corporation, used by over 90% of U.S. lending institutions.

Credit UtilizationThe ratio of a borrower's outstanding revolving credit card balances compared to their total available credit limit.

Hard InquiryA credit report check initiated by a lender when a consumer applies for new credit, which can affect credit scores.

Credit LimitThe maximum amount of revolving credit a lender permits a borrower to carry on a credit card or line of credit.

Financial Decisions Disclaimer (YMYL & E-E-A-T)

Disclaimer: NetWorthFlow provides financial calculators, simulators, and projection tools for informational and educational purposes only. None of the calculations, data, or results displayed on this website constitute professional financial, investment, tax, or legal advice. All calculations are mathematical models based on user-supplied variables and general assumptions, which may not reflect real-world market outcomes. Always consult with a certified financial planner, licensed investment advisor, or qualified tax professional before making any financial decisions.

Automated tools are not a substitute for professional counsel. We strongly advise that you consult a qualified Certified Financial Planner (CFP®), Registered Investment Adviser (RIA), Certified Public Accountant (CPA), or legal expert before making significant decisions regarding taxes, mortgages, retirement planning, investments, or debt management.