What is a Credit Score?
Credit scores are important, because they can determine whether or not a bank will loan you money, what kind of interest rate you are going to get, and your credit limit. When applying for credit from a bank or lender, the lender takes on a certain amount of risk. They risk the fact that you might not be able to pay back the money that you borrow. This risk is called your credit risk.
Your credit score is the numerical representation of your credit risk.
The number is determined by three different credit bureaus that keep credit information on file about you. The bureaus use information from bank accounts and any other form of financial information you have to determine the credit score. Their scores are determined by accounts that have been open for at least 6 months. Sometimes a lender will calculate their own credit scores for you rather than using the ones given by the credit bureaus. Your credit score will be better if you always pay your bills on time and if you don't have any delinquent loans.
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