EyeOnWhat it means
A credit score is a summary figure. Credit reference agencies (also called credit bureaus) collect information about your accounts, payments and applications, and a scoring model turns that information into a number. The higher the number, the more favourably many lenders may view the record behind it.
There is no single universal score. Different agencies and different scoring models produce different numbers, and the scale itself varies, with common ranges including 300 to 850, 0 to 999 and 0 to 1,000. A lender may also use its own internal scoring alongside, or instead of, a score you can see.
How it works
Scoring models usually look at patterns rather than single events. Typical inputs are whether payments were made on time, how much of your available credit you are using, how long accounts have been open, the mix of credit you hold and how many recent applications there have been.
The exact weighting is set by each model and is not usually published in full, so any list of factors is a general guide rather than a formula you can calculate yourself.
A simple example
Imagine two people with the same income. One has paid every bill on time for six years and uses a small part of their card limit. The other has missed two payments this year and is close to their limit. The first person's record would usually be read more favourably by a scoring model, even though their incomes match. This is an illustration only and does not predict any actual score.
Things worth checking
- Scores from different providers are not directly comparable, so check which scale and model a score uses.
- A score is not a decision. A lender looks at the application, affordability and its own rules as well.
- Errors on a credit report can affect a score, so reading the report itself is often more useful than watching a number.
- Be cautious about paying for a score you can usually view elsewhere. Availability and cost vary by country.
How it varies by country
Credit reporting systems differ widely. In some countries a score is widely used in lending decisions; in others lenders rely more on the report itself or on their own models. Check which agencies operate where you live.