WHAT IS A CREDIT SCORE?
Credit scores are one measure that banks and other lenders use to determine a consumer’s credit-worthiness. The score often affects loan interest rates as well as the ability to secure a loan. In some cases, employers or landlords use credit scores to determine an applicant’s reliability.
- The following five categories determine credit scores:
- Payment history (35%)
- The amount of money owed to creditors (30%)
- Length of credit history (15%)
- New credit (10%)
- Types of credit used (10%)
Credit scores can range from 300 to 850, with a higher number indicating a better score. Consumers with high credit scores may be able to secure loans more easily and may be offered lower interest rates on those loans. People with low scores should consider credit repair.
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