Your credit score is a compilation of your credit history from banks, other financial institutions, and various other bodies such as courthouses and the Office of the Superintendent of Bankruptcy. This information is compiled in the form of a credit report which can be shared with financial institutions, other lenders, or businesses as one of the ways to help assess your creditworthiness or likelihood that you will repay your loan. A credit score is calculated based on the information in the credit report.
A credit score is a three-digit number, typically between 300 and 900, which is designed to represent your credit risk, or the likelihood you will pay your bills on time. The higher your score the better. The score is calculated based on your payment history, credit utilization (used versus available), length of credit history, and how many inquiries have been made in your file. Lenders have various credit score range ratings that are used as one of the factors in determining the interest rate you will be changed. Typically, the higher your credit score the less interest you will have to pay as you are viewed as more creditworthy (less risky to lend to you).
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