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To interpret your credit score, and what it tells you about your borrowing power, you need to understand where the score falls along the score range between the lowest and highest numbers generated by its scoring system.
All credit scores have the same basic goal: helping lenders (and other potential creditors, such as landlords and utility companies) understand how risky it may be to do business with you. High credit scores indicate relatively low likelihood of default and relatively low risk for creditors.
Lower scores, in turn, indicate greater risk.
An extremely low credit score, which suggests a history of poor debt management, may cause creditors to decide against lending you money, leasing you an apartment, or issuing you phone or cable equipment. More often, lenders use credit scores, along with other information such as employment history and proof of income, to decide how much they are willing to lend you and at what interest rate. Landlords and utility companies also may use credit scores to help decide whether to charge you a security deposit—and how large it should be.
All other factors being equal, a higher credit score generally means you’ll pay lower interest rates, fees and deposits. Over the lifetime of a loan, even a small reduction in rate can save you thousands of dollars in interest, so it pays to have a high credit score.