A credit score is a numerical rating credit agencies use to sum up someone's credit history. FICO is a commonly used credit score, and it ranges from 300 to 850 points. The higher the score, the better the creditworthiness.
Generally, individuals with a higher credit score have more accounts that are paid on time and fewer delinquencies.
When a lender appraises someone for creditworthiness, he receives the credit score and a series of codes that indicate up to four reasons the score may not be higher. For instance, a low score may be accompanied by codes indicating serious delinquency, a large debt to income ratio and too many open accounts.
While the score can be as low as 300, in many cases, lenders consider anything below 650 to be poor credit. A credit score of 650 to 720 indicates moderate credit, 720 to 800 is good credit, and anything over 800 represents a superb credit history. Customers with lower credit scores may be offered higher interest rates, while those with a stellar credit history may receive preferential treatment.
There are a number of different credit scores used by different agencies, and each may weight certain entries on a credit history differently. In addition, lenders often take many other factors into account when offering credit, so a decent credit score alone may not be enough to get a particular loan.