A credit score is a numerical value assigned to you that allows creditors and lenders to determine the risk that you pose in paying back the credit they extend to you. Your credit score is an integral part of your credit health. Anytime you apply for a loan or a line of credit, regardless of the lending institution, lenders look at your credit score to determine the chances that you might not pay off the money you are lent.Effectively, credit scores are a numerical indicator of the risk that you might not pay back the money you are loaned in a timely manner.

Credit scores are calculated by using available data reported to credit bureaus by lenders. When you maintain healthy balances and make on time payments, credit bureaus are informed of your good behavior and in the eyes of future lenders, your credit risk is thereby reduced. When you max out credit lines and miss payments credit bureaus are also informed. By tabulating all these reports, credit bureaus are able to summarize your credit risk in one simple number.

Not every credit score you can get online is the same, but the most accurate credit scores are created using software developed by Fair Isaac and Company, otherwise known as FICO. While credit scores vary from one credit bureau to another based on the reports lenders provide, the average of the three major credit bureaus provides a strong snapshot of your credit risk.