credit score

[ kred-it skawr ]

noun

, Personal Finance.

1. a numerical ranking of an individual’s financial creditworthiness based on spending and credit history, indicating to potential lenders and credit card issuers the individual’s capacity and likelihood to make timely payments of amounts due on loans or credit cards.

Word History and Origins

Origin of credit score¹

First recorded in 1975–80

Example Sentences

Credit Karma has a calculator to help you figure this out, and a better credit score means a lower PMI rate.

From Salon

Credit Karma has a calculator to help you figure this out, and a better credit score means a lower PMI rate.

From Salon

I spent my 20s accruing credit card debt and student loans, working low-paying jobs with no retirement plans or health insurance, not thinking about investing and never checking my credit score.

From Salon

For example, I had a low credit score despite paying all of my bills and rent on time every month for years.

From Salon

It insists that a low credit score reflects financial irresponsibility, for example, but ignores the ways credit scoring excludes so many folks — like renters, whose payments aren’t reported to credit bureaus; low-income folks who can’t afford the collateral for secured credit; Black Americans, who were deliberately excluded from credit and wealth-building for centuries; or LGBTQ+ folks whose protection from blatant discrimination in lending wasn’t codified until 2021.

From Salon

More About Credit Score

What does credit score mean in credit management?

A credit score is a number assigned to a person indicating their capacity to repay a loan to potential lenders. It is based on a person’s spending and credit history and ranks financial creditworthiness.

Banks or other creditors use this score to assess a potential borrower’s credit risk, that is, the probability they will default on a loan. A good credit score can result in a lower interest rate being offered, which will lower the total interest paid over the life of the loan.

Credit scores are calculated taking into account the individual’s financial history, including the timeliness of payments of credit cards, loans, and consumer bills, and any defaults on outstanding debts. Improvements in any of these areas can raise a credit score, while any deteriorations can lower a score.

Credit card issuers use a credit score to limit the amount of outstanding balance a cardholder may have.

A FICO Score (the credit rating most used by banks and credit card issuers) can range from a low of 300 to a high of 850, the higher numbers reflecting more ideal borrowers.

Examples of credit score in a sentence

“A good credit score can help you qualify for financing, such as personal loans.”
—”What Is A Credit Score (And Why It Matters)” Rocket Loans. Retrieved March 15, 2020.

“Apart from a good credit score, lenders also look at factors such as your individual income and your ability to pay back another loan.”
—”Personal Loan Vs. Credit Card” Rocket Loans. Retrieved March 15, 2020.

“While it depends largely on the lender, the minimum credit score you’ll need to get a personal loan usually falls anywhere between 600 to 700.”
—”How To Get A Personal Loan” Rocket Loans. Retrieved March 15, 2020.

Other terms connected with the topic of credit score

• ​credit
• credit rating
• credit utilization ratio
• FICO score
• credit risk
• creditworthiness
• interest rate
• loan