A number which indicates an individual’s credit risk and is determined from the results of a credit report. A higher credit score suggests that an individual is likely to repay the debt on time while a low credit score indicates a high credit risk on the borrower. This leads to the borrower qualifying for a lower amount of credit, being charged a higher interest and in other cases being denied a credit line.
The five most important factors that influence an individual’s credit score include their borrowing as well as payment history, amount owed currently, length of credit history, level of the most recent credit history and the different types of credit used.
The FICO (Fair Isaac Company) score is the most common credit score used. The score scale spans from 350 to 850. The median score falls around 720 while a score above 750 gives individuals very high chances of securing a mortgage at a very low interest rate. Usually, high credit scores raise competition among lenders for such types of clients.