A credit score is a number that companies use to decide if you are a high or low-risk borrower. This score impacts how likely you are to be approved for a mortgage, auto loan, credit card, or anything that requires borrowing money. This score also impacts the interest rate you will receive on the loan you are applying for.
Having a higher credit score allows lenders to perceive you as a lower risk with the ability to repay a loan. Your chances of being approved for a loan will be high and your interest rates will be lower for that loan. The better your credit score is the more opportunities you will have to take out loans and the less you’ll pay back in interest over the term of your loan.
Having a lower credit score allows lenders to perceive you as higher risk with less ability to repay a loan. Your chances of being approved for a loan are lower. If you are approved for a loan you will most likely have a higher interest rate. The worse your credit score is the fewer opportunities you will have to take out a loan and the more you will pay back in interest over the term of your loan.
