Credit Score

A statistically derived, numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts. A credit score is based on, among other things, a person's past credit history. It is a number between 300 and 850, the higher the number, the more creditworthy the person is deemed to be.

Investopedia Says:

A FICO score is the most widely used credit scoring system. FICO is an acronym for Fair Isaac Corporation, the company that provides the credit score model to financial institutions. Consumers can typically keep their credit scores high by possessing a long history of always paying their bills on time, and not having too much debt. There are other providers of credit scoring systems as well. A credit score plays a large role in a lender's decision to extend credit and under what terms. For example, borrowers with a credit score that is under 600 will be unable to receive a prime mortgage and will typically need to go to a sub prime lender for a sub prime mortgage, which will typically have a higher interest rate.

Tips for Building A Better Credit Score

• Pay your bills on time. Delinquent payments and collections negatively impact your score.
• Keep balances low on credit cards and other "revolving credit." High outstanding debt lowers your credit score.
• Apply for and open new credit accounts only as needed. Don't open an account just to have a better credit mix; it probably won't raise your score.
• Pay off debt instead of moving it around. Owing the same amount, but having fewer open accounts may lower your score.