Your credit score is a number, typically between 300 and 850, that's determined based on information in your credit report, which includes things like loan payments, open credit card accounts, collections, foreclosures, and more. Lenders use your credit score to gauge how likely you are to repay debt.
There are actually a few different credit scoring systems out there, which means you actually have several different credit scores. In the United States, FICO scores and VantageScore are the most common. Of the two, FICO is the one you'll really want to watch, because it's used in more than 90% of lending decisions. Since your FICO score is so influential, it's what we'll be really focusing on here, but keep in mind that other scoring systems work a little differently.
There are three credit bureaus (Experian, TransUnion, and Equifax) that develop your credit reports, and they each show slightly different information. For example, I used to have a debt in collections that didn't show up on my TransUnion report, making that score higher than what I saw from the other bureaus.
If you want to buy a car, open a new credit card, or even mortgage a home, your credit score will affect what kind of interest rates you get, or if you're able to secure a loan at all. And the sucky truth is, when your credit score is lower, you'll wind up paying higher interest rates and fees — which means bigger bills for the same stuff. This is especially tough when you're not making a lot of money, and personally, I hate it.
But the good news is you don't have to be rich to have good credit. Having money helps, obvi, but your bank account balance is not even a factor in calculating your score.