What is a credit score and why is it important?

A credit score is a numerical representation of an individual's creditworthiness. It is a tool used by lenders to assess the risk of lending money to someone. Credit scores typically range from 300 to 850, with higher scores indicating lower risk. A credit score is important because it affects one's ability to secure credit, such as loans and credit cards, at favorable terms. It also impacts other aspects like insurance rates, rental applications, and even job opportunities. A higher credit score signifies responsible financial behavior and increases the likelihood of loan approvals with lower interest rates. Monitoring and understanding one's credit score through platforms like Credit Karma can help individuals make informed financial decisions and take steps to improve their creditworthiness.