Credit scores are used by lenders and financial institutions to assess an individual’s creditworthiness and their ability to repay loans. Credit scores are calculated based on a number of factors, including payment history, credit utilization, length of credit history, types of credit used, and recent credit inquiries.

The most commonly used credit score is the FICO score, which ranges from 300 to 850. A higher score indicates better creditworthiness, while a lower score indicates higher risk. Here’s a breakdown of the FICO score ranges and what they mean:

• Excellent (800-850): Individuals in this range are considered very low risk and are likely to receive the best interest rates and loan terms.

• Very Good (740-799): Individuals in this range are considered low risk and are likely to receive favorable interest rates and loan terms.

• Good (670-739): Individuals in this range are considered moderate risk and may receive slightly higher interest rates and less favorable loan terms.

• Fair (580-669): Individuals in this range are considered high risk and may have difficulty obtaining credit or may receive higher interest rates and less favorable loan terms.

• Poor (300-579): Individuals in this range are considered very high risk and may have difficulty obtaining credit or may only be able to obtain credit at very high interest rates.

It’s important to note that credit scores are not the only factor considered by lenders when making lending decisions. Lenders also consider factors such as income, employment history, and debt-to-income ratio. Additionally, different lenders may have different criteria for assessing creditworthiness and may use different credit scoring models.