What is a credit score?

A credit score is a three-digit number that lenders use to assess your creditworthiness. It’s based on information in your credit reports, which are maintained by three major credit bureaus: Experian, TransUnion and Equifax. Your credit score can range from 300 to 850 – with a higher score indicating a stronger credit history and a lower score indicating a weaker credit history. Generally, a score of 740 or higher is considered excellent, while anything below 600 is considered poor. In California, the Fair Credit Reporting Act and credit repair law requires that the credit reporting agencies use consistent standards to calculate your credit score. This credit score impacts not only your ability to borrow money, but also may affect the rate at which you can borrow. For example, if you have a higher credit score, you may be able to get a lower interest rate on an auto loan or a mortgage. Some of the components that factor into your credit score include your payment history, recent inquiries, available credit (total balance to total limit ratio) and the types of credit you have. Your payment history is one of the most important factors that determine your credit score, so it’s important to consistently and on time. Additionally, having a variety of types of credit – such as a car loan, credit card, and mortgage – can help you build a strong credit history.

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