Your credit score is a number, calculated based on information in your credit report, that lenders use to assess the credit risk you pose and the interest rate they will offer you if they agree to lend you money. Most lenders use credit scores rather than credit reports since the scores reduce extensive, detailed information about your financial history to a single number.
Companies use a mathematical formula, called a 'scoring model', to create their credit score from the information in your credit report, and it predicts the probability that you will repay a loan on time.
Some of the factors that make up a typical credit score are:
- Your bill payment history.
- Your current outstanding debts.
- The amount and type of loan accounts you have.
- The time you have had your loan accounts open.
- The amount you use of your available credit.
- New credit applications.