What does a credit score primarily measure?

A credit score primarily measures the ability to repay borrowed money. This numerical representation is derived from various factors related to an individual's credit history, including payment history, outstanding debts, length of credit history, types of credit used, and new credit inquiries. Lenders utilize credit scores to assess the risk associated with lending money to an individual; a higher score indicates a lower risk, suggesting the borrower is likely to repay their loans on time.

The focus on repayment ability is crucial because it directly impacts lending decisions, interest rates, and terms of credit offered to borrowers. For instance, individuals with higher credit scores typically receive better loan conditions, such as lower interest rates, because they are deemed more reliable in fulfilling their debt obligations.

In contrast, the other options do not accurately reflect what a credit score measures. Savings in an account relate to an individual's liquidity and financial stability but do not indicate how well they manage credit. Total assets owned provide insight into overall wealth but do not directly correlate with creditworthiness. The frequency of applying for loans may reflect a person's credit-seeking behavior but does not measure their ability to manage and repay debt.