Credit Score

A credit score is a three-digit number, typically ranging from 300 to 850, that reflects a consumer’s creditworthiness based on their financial history. It is calculated using factors such as payment history, amounts owed, length of credit history, types of credit, and new credit inquiries.

The most commonly used models are FICO and VantageScore, though variations exist. For lenders, a higher credit score signals lower risk, often leading to better loan terms, lower interest rates, and broader access to financing.

For consumers, maintaining a strong credit score is crucial for securing affordable auto loans, leases, mortgages, and even insurance premiums in some states. A low score can limit options or result in higher costs.

Credit scores are dynamic, changing as financial behaviors change. Late payments, high credit utilization, or defaults can quickly reduce scores, while consistent on-time payments and low debt usage improve them.

Beyond lending, employers, landlords, and insurers may review credit scores when making decisions. For auto financing specifically, credit scores influence whether consumers qualify for promotional rates, subprime loans, or leasing deals.

For the industry, scores standardize risk assessment, but critics argue they oversimplify financial health and sometimes disadvantage those with limited credit history. Ultimately, understanding credit scores empowers consumers to manage finances more effectively and secure favorable terms.