What is a credit score?

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What Is a Good Credit Score?

Credit scores are numbers lenders use to help them decide if a person is likely to pay back a loan on time, or at all. Credit ratings are generated through statistical models using elements from your credit report. However, credit scores are not physically stored as part of your credit history on your credit file. Rather, they are typically generated at the time a lender requests a credit rating and is then included as part of the report. When people ask, "What is a good credit score?" they are really wondering how they can improve their credit ratings.

Credit Ratings

Your credit rating is a fluid number and it changes as the elements in your credit report change. For example, payment updates or a new account could cause your credit scores to fluctuate. There are many different credit rating scores used in the financial service industry. Your credit rating may be different from lender to lender (or from car loan to mortgage loan), depending on the type of credit scoring model used.

Next: How are scores are calculated?