What is the primary purpose of a credit score?

The primary purpose of a credit score is to evaluate a person's creditworthiness. Credit scores are numerical representations of an individual's credit history, including factors such as payment history, the amount of debt owed, length of credit history, types of credit used, and new credit inquiries. Lenders use this score to assess the likelihood that a borrower will repay their loans. A higher credit score typically indicates a lower risk for lenders, which can lead to better credit terms for the individual, such as lower interest rates or higher credit limits. This evaluation of creditworthiness is essential for lenders when deciding whether to approve a loan or extend credit to a potential borrower.

The other options do not align with the primary role of a credit score. Identifying investment opportunities, determining loan interest rates, and managing bank accounts are all important financial activities but are not the core function of a credit score itself. The credit score simply serves as a tool for evaluating risk and credit reliability.