What is a Credit Score?
A credit score in the United States is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts. It has shown to be very predictive of risk, made credit more widely available to consumers and lowered the cost of providing credit.
A credit score is primarily based on a statistical analysis of a person’s credit report information, typically from the three major American credit bureaus: Equifax, Experian, and TransUnion. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.
Credit scores are calculated from a lot of different credit data in your credit report. The percentages in the chart reflect how important each of the categories is in determining your credit score: 35% payment history, 30% amounts owed, 15% length of credit history, 10% new credit and 10% types of credit used.