Understanding Credit Scores and How to Improve Them

A credit score is a numerical representation of an individual’s creditworthiness, ranging from 300 to 850. Lenders use this score to determine the risk of lending money. A higher credit score leads to better loan terms, lower interest rates, and increased financial opportunities. Key factors affecting a credit score include payment history, credit utilization, length of credit history, and new credit inquiries. To improve a credit score, it’s important to pay bills on time, reduce debt, and avoid opening too many new accounts at once.