What is Credit Score?

A credit score is a numerical rating — typically 300 to 850 in the US — that summarises a borrower's creditworthiness based on credit history, used by lenders to decide loan approval and pricing.

FICO and VantageScore are the dominant US models. The score blends payment history (35%), credit utilisation (30%), length of credit history (15%), credit mix (10%) and new credit inquiries (10%).

Switzerland and most of continental Europe use different systems: ZEK and IKO in CH, Schufa in DE, FICP in FR. They are more binary (negative entries vs none) than the US scoring approach. Building credit means using credit responsibly: pay on time, keep utilisation under 30%, and avoid frequent applications.

Example

A US borrower with a 760 FICO score qualifies for the lowest mortgage rates; a 650 score pays 0.5–1 percentage point more, costing tens of thousands over a 30-year loan.

Related terms

Credit Utilisation

Credit utilisation is the percentage of available credit on revolving accounts (credit cards, lines of credit) that is currently being used — a major component of credit scores, with lower being better.

Debt Snowball Method

The debt snowball method is a debt-repayment strategy in which the borrower pays minimums on every debt and channels all extra funds to the smallest balance first, then rolls each freed payment into the next-smallest balance.

Debt Avalanche Method

The debt avalanche method is a debt-repayment strategy in which the borrower pays minimums on every debt and channels all extra funds to the highest-interest-rate balance first, regardless of size.

Budget

A budget is a written plan that allocates expected income to spending, saving and debt repayment categories over a defined period, used to control finances and reach goals.

Frequently asked questions

What is considered a good score?+

FICO: 740+ is good, 800+ is excellent. Each lender sets its own thresholds.

How fast can I improve it?+

Lowering utilisation can move the score in 30–60 days; building history takes years.

Does checking my own score hurt it?+

No — self-checks are soft inquiries; lender checks are hard inquiries that briefly lower the score.