Today’s Un-Stupid Question you’re too afraid to ask is – “What is a Credit Score?”
A credit score is like a grade for how good you are at borrowing money and paying it back.
This score helps banks decide if they will lend you money for things like a house or a car.
A higher score means you’re good at paying back money on time, and less of a risk for them. So they will usually make it cheaper to borrow (aka – lower interest rates).
But a lower score means you’re you might have had some trouble in the past, and are more risky to lend money to. So they will either not approve low scores, or make it more expensive to borrow (aka – higher interest rates).
Credit scores range from 300 to 850, and are broken down into 5 chunks – Poor, Fair, Good, Very Good and Excellent.
Most banks only like to lend to “Good” scores and above, which starts at 670. There are plenty of lenders for scores under that, but they get more expensive.
Your credit score is calculated from 5 factors:
