What Is My Credit Score and What Does it Mean?

With all the information on your credit report, you may wonder how a creditor can make a fair decision about your credit. One way they do this is by using a computer model to analyze your credit and give you a "credit score."

A credit score is used to predict how likely it is that a person will pay back a loan. There are many computer models that can calculate your credit score, but generally, the information in your credit report is assigned points.

For example, making payments on time every month is positive for the final score, while charging a card up to the maximum amount is negative for the score. The computer adds up the positive and negative points, and the resulting number is the credit score.

A good credit score varies depending on the creditor and model used. One model ranges scores from 300 to 900, and the higher the number, the better. Creditors also decide what score range it considers to be a "good risk," meaning that the person is likely to pay back the loan.

Because all creditors are different, it’s best to check with the individual creditor to explain what your score means in relation to the final credit decision.