What is a credit score and why is it important?

A credit score is a numerical representation of an individual’s creditworthiness, based on their credit history and financial behavior. It is typically calculated by credit reporting agencies and ranges from 300 to 850, with higher scores indicating better creditworthiness. A good credit score is important because it affects the ability to borrow money, the interest rate on loans, and even job prospects in some cases. Lenders use credit scores to assess the risk of lending money, while individuals with higher scores are generally able to access better financial terms.