A credit score is a number that helps lenders to estimate whether you will make your loan payments on time or not. It represents your creditworthiness. A credit score is derived by the information contained in your credit report.
Credit scores affect whether you get a loan or not and if you do, at what rate. Higher credit score means that you are more likely to be approved a loan and at a lower rate of interest. Lenders like banks and credit card companies use credit scores to reckon your ability to repay your debts, thus reducing the probability of a bad debt. Credit scoring is not just confined to banks. Other organizations like insurance companies, mobile phone companies, government departments, employers and even landlords consider your credit score.