Definition
Credit Score
A credit score is a three-digit number summarising your creditworthiness based on your borrowing and repayment history, used by lenders to decide on loans and interest rates.
A credit score distils your credit behaviour — repayment timeliness, credit utilisation, length and mix of credit, and recent enquiries — into a single number, typically in a few-hundred-point range. Higher scores signal lower default risk.
Lenders use it to approve or reject applications and to set interest rates; a strong score can fetch cheaper loans and higher limits. Missed payments, high card utilisation and frequent loan enquiries can pull it down.
Good habits — paying on time, keeping utilisation low, and limiting unnecessary applications — build the score over time. It is generated from your bureau Credit Information Report.
Related terms
- Buy Now Pay Later (BNPL)Buy Now Pay Later is a short-term financing option at checkout that lets you receive goods immediately and pay later, either in one deferred payment or in instalments.
- APRThe Annual Percentage Rate expresses the total yearly cost of a loan — interest plus mandatory fees — as a single percentage, enabling apples-to-apples comparison of credit offers.
- Credit Information Report (CIR)A Credit Information Report is the detailed record maintained by credit bureaus of your loans, credit cards and repayment history, which underlies your credit score.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.