A credit score is a number that is used to predict how likely you are to pay back a loan. Your credit score starts with the information about you from your credit report. A mathematical formula – called a scoring model – is then used to create your credit score. There is no “one” credit score; there are many credit scoring formulas available to you as a consumer as well as to lenders. The CFPB recently published a report on the differences between the credit scores available to consumers and those to lenders.

Credit scores are used by companies to make decisions such as whether to approve a mortgage at a certain rate or issue a credit card. Different lenders use different scoring formulas, so your score can vary from lender to lender. Usually a higher score makes it easier to qualify for a loan and means a better rate of interest. Most scores range from 300-850, although there is one scoring method that uses a range from 501-990.

TIP: To get and keep a good credit score:

• Pay all your bills on time
• Make sure the information in your credit reports is correct
• Only apply for the credit that you need
• Don’t use too much of the credit that is available to you