Purpose

Credit scores are used as an objective, unbiased way of measuring the likelihood that a person will pay his debts--and on time.

Method of Scoring

Credit scores are usually determined on a range of 300 (bad credit) to 850 (excellent credit) to assess credit risk or a person's level of financial responsibility. The higher your score, the better your credit and the lower your credit risk.

Factors

A number of factors are considered in determining your credit score--payment history, credit utilization, length of credit history, types of credit used, number of credit inquiries and recently acquired credit.

Use

Credit bureaus collect and compile data to create people's credit histories. Financial institutions use this information to determine whether they can grant or deny credit based on the credit score.

FICO

The credit score has become synonymous with the FICO score, the most widely used credit scoring system in the United States. FICO is an acronym for "Fair, Isaac and Company," a financial consulting company that developed the system.

Changes

Your credit score is never static. It changes from time to time---for better or worse---due to new information. It also can differs from one credit bureau to another due to variances in data between bureaus.

Source:

myFICO: About Credit Scores

Fair, Isaac and Company