A credit score is a three-digit tally — ranging from 300 to 850 — assigned to consumers based on their credit activity. This can include getting a credit card, taking out a personal loan and paying your bills.
Creditors use your credit score to weigh your creditworthiness, or how likely you are to repay your bills in full and on time. Your credit score affects everything from renting an apartment to the rates and amounts you receive on mortgages and other loans.
The higher your score, the more creditworthy you are to lenders. If your credit score is low, lenders will perceive you as a risky borrower and charge you higher interest rates.
How your score is calculated
Your credit activity is reported to the three credit bureaus – Equifax, Experian and TransUnion – which keep a record in what’s known as your credit report.
Your credit score is calculated based on the events recorded on your credit report and can vary depending on which of the credit bureaus is used, as some creditors only report to one or two of the credit bureaus instead of all three.
While many creditors look at your FICO Score, some lenders use VantageScore instead, a credit score model created by the three credit bureaus. LendingTree provides you with the most recent version of your VantageScore 3.0.
THE LENDINGTREE CREDIT SCORE SCALE
Why check your credit score?
There are many reasons to check your credit score. First, it’s good to know where you stand since the interest rate you receive on loans – including mortgages, auto loans, personal loans and more – is dependent on your score. And second, keeping an eye on your credit score can alert you of errors or fraudulent activity in your name. If you notice a sudden drop in your score, for example, you can pull your full credit report at AnnualCreditReport.com and review it in detail.