A credit score is a number lenders use to help
them decide — “If I give this person a loan or
credit card, will I get paid back on time?” It is
a key factor in determining your interest rate,
and is one of several pieces of information
that auto, mortgage, credit card and other
lenders use when evaluating your application
There are different types of credit scores.
Credit bureau scores are based solely on
information in consumer credit reports.
Other types of scores may also include
information from credit applications or
bank files. A credit score is calculated by a
computer in your financial institution or at
one of the national credit bureaus when a
lender requests it.
A credit score is a snapshot of your credit risk at a particular point in time. Only information that is proven to be
predictive of future credit performance is used. Your credit score is based on information in your credit report such
• Payment history – current and historical delinquencies
• Amounts owed – outstanding debt balances, both in terms of dollars owed and percent of available credit
• Length of credit history
• Pursuit of new credit – generally called inquiries
• Types of credit in use
Your credit score is not based on factors prohibited under the Equal Credit Opportunity Act (ECOA) including: race,
age, gender, religion, national origin and marital status. Other factors excluded are income, employment and where
What is a good score?
The most common model for credit scoring is the FICO score. FICO scores range from 300 to 850 with the higher the
score, the lower the risk of default. There is no legal requirement for a lender to reveal a credit score to an applicant.
But if an application is denied, the lender must reveal the reason(s) for the denial.
A “good” score is a number that matches the level of risk a lender is willing to accept for a particular loan or credit
card. For example, a score of 750 may qualify you for a gold credit card, whereas a score of 675 may indicate you’re
a better match for a standard card. Scoring systems have varying numeric scales. A score of 675 could indicate high
risk in one system and low risk in another. A good score varies from lender to lender.
While you can improve your future score, it is unlikely that any single action you take will have a large impact on
your score immediately. That’s because your score reflects your credit patterns over time.