credit score
A numerical expression (typically 300–850) representing a person's creditworthiness based on their credit history.
Example
“Paying bills on time helped him raise his credit score from 620 to 750.”
Memory Tip
Your credit SCORE is like a test score — higher is better, and it reflects how trustworthy you are with money.
Why It Matters
Your credit score is one of the most impactful numbers in your financial life. It determines your borrowing costs affects insurance premiums influences rental applications and can even affect job prospects in some industries. A 100-point difference in score can mean tens of thousands of dollars in extra interest over a lifetime.
Common Misconception
Many people believe checking their own credit score hurts it. Checking your own score creates a soft inquiry which has zero impact on your score. Only hard inquiries when a lender checks your credit as part of an application affect your score and even then the impact is typically small and temporary.
In Practice
The five factors in your FICO score are payment history at 35% amounts owed at 30% length of credit history at 15% new credit at 10% and credit mix at 10%. The single most effective way to improve your score is paying every bill on time. Setting up autopay eliminates the most damaging scoring event: a missed payment.
Etymology
Credit (trustworthiness) + score (a number rating) — a number rating your credit trustworthiness.
Common Misspellings
Build a budget and track your spending
Related Terms
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See Also
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