What Is Credit Score?

Banking Term Definition | Last Updated: April 2026 | Browse All Terms

Credit Score — A number (300-850) that represents how reliable you are at paying back borrowed money. Your credit score affects much more than just loan approvals.
Definition
A number (300-850) that represents how reliable you are at paying back borrowed money. Higher scores make it easier to get loans and lower interest rates.

Example: "A credit score of 750 is considered 'good' and will qualify you for better loan rates."

Why It Matters

Your credit score affects much more than just loan approvals. Landlords check it when you apply for an apartment, insurance companies use it to set premiums, and some employers review it during hiring. The score is calculated from five factors: payment history (35%), amounts owed (30%), length of credit history (15%), new credit inquiries (10%), and credit mix (10%). The single most important thing you can do for your credit score is pay every bill on time, every month. Even one missed payment can drop your score significantly.

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Related Banking Terms

APR (Annual Percentage Rate) The yearly interest rate charged on borrowed money (loans, credit cards) or earned on savings. Loan Money borrowed from a bank that must be paid back with interest over a set period. Interest Rate The percentage used to calculate interest.

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