While your credit scores definitely affect your ability to secure credit, it’s probably not in exactly the way you think. Most lenders care more about the credit risk level your score implies than the actual score itself.

Why don’t lenders get hung up on the actual number? Keep in mind that a credit score is basically an educated prediction of your creditworthiness based on your past and current credit behaviors. The score is meant to help lenders understand if there’s a high risk that you’ll fail to repay a loan or line of credit, or little risk. Generally, a low credit score is associated with higher risk, and a higher score gets interpreted as lower risk of default.

Your score falls into a range and each range implies a level of risk – very high, high, moderate, low or very low. This is why two people can have scores 10 or more points apart and still be considered in the same risk range. An easy way to think of it is like grades in school. Two people could have gotten an 82 and an 88 on the same test, but both of them got Bs. Similarly, two people could have credit scores of 653 and a 692 and both be considered moderate risks by lenders.

Different Score Calculations Usually Produce the Same Risk Level

Every company that produces credit scores uses a different calculation (and some produce many different calculation models), so it is very common for your credit score to change from one company to another. However, since those scores are just numbers to help determine risk, the credit risk levels those scores end up in are usually pretty similar.

Let’s go back to our grade example. Three different teachers could grade the same paper and give it a 91, a 94, and a 98, but all of those numbers still make for an A. Similarly, three different companies could score the same report as a 724, a 736, and a 743, but all of those scores fall into the low risk level.

How Credit Risk Levels Figure into Lender Decisions

Lenders consider many factors when making decisions about consumer credit applications, and your credit score and credit risk level are just two of them. Often, much of the process of application review is done by a computer, and your credit score is generated automatically through a complex algorithm that evaluates information contained in your credit report.

Fortunately, good credit management behaviors – such as paying bills on time and paying off credit card balances – can positively influence your credit scores, which in turn tells lenders you’re a good bet to repay what you owe.