Your credit score is a three-digit number generated by a mathematical algorithm based on information in your credit report, compared to information on tens of millions of other people. The credit scoring concept is based on boiling down a borrower’s entire credit history into one objective number. The formula for the credit score takes into account how you’ve been paying your bills, how much you owe, the length of your credit history, how much new credit you have and what kind of credit (mortgage, credit cards, installment loans) you use.

Your credit score will influence whether your credit will be approved and how much the interest rate will be. The higher the score, the lower the interest rates. That can be converted to hundreds of thousand  dollars in interest.

The advent of credit scores simplified the credit review process. Lenders use credit scores to quickly summarize a consumer’s credit history, saving the need to manually review an applicant’s credit report. This can lead to a better and faster risk decision. The higher your score, the easier it will be for you to receive an automated loan approval.

Many lenders consider your credit score in conjunction with other factors, such as your annual income and how long you’ve held your current job.