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Summary
The result of a statistical model that attempts to quantify the likelihood that a borrower will repay (or fail to repay) a loan or some type of credit obligation satisfactorily. The best known and widely used credit score is called the "FICO Score" (Fair Isaac Corporation).

Meaning of the Numbers
Credit scores range from 300 to 850. According to MSN Money only about 11% of the surveyed population ranks above 800 and 29% ranks between 750 and 799. Unfortunately there isn't an exact mapping to your exact credit score. The rule of thumb is credit scores above 700 are considered very good. Lenders are likely to use this as a factor to interpret this score as a sign of good financial health.

Credit scores below 600 tend to translate into high financial risk to lenders. Even scores that are considered high financial risk do not necessarily mean lenders won't grant loans, credit cars, etc. Often there are lenders that will grant you debt and will charge higher to much higher interest rates to do so.

Calculated FICO Scores
The three major credit bureaus (Equifax, Experian and Trans Union) calculate their own FICO scores. Each of the three bureaus go by different names and may involve minor differences in the calculation logic. All of these versions are created for the bureaus by the Fair Isaac Corporation. They differ and are periodically updated to reflect current consumer trends.

Most of the credit bureaus (including the three big ones) have created their own proprietary versions of a credit score. These scores compete with the FICO score and are generally offered at a less expensive rate (banks and lenders have to pay for these calculations/algorithms to be run). Many large banks and financial institutions also build and use their own proprietary statistical models for credit scoring purposes, often in conjunction with the FICO score or other outside scores.

A score is a “snapshot” of your risk at a particular point in time. Your credit score is updated as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. Your credit score is not the sole factor in qualifying for credit, but is definitely an important factor to keep in mind!

FICO Calculation Pie Chart
Here is a pie chart that shows the approximate weight that Fair Issac gives to specific categories in calculating the FICO Score.

Government Regulations on the Credit Score
The Federal Reserve Board's Regulation B, which implements the Equal Credit Opportunity Act, expressly prohibits a credit scoring model from considering any prohibited basis such as race, color, religion, national origin, sex, or marital status. Regulation B also stipulates that credit scoring models must be empirically derived and statistically sound. Furthermore, if an adverse action is taken as a result of the credit score (e.g. an individual's application for credit is denied) then specific reasons for the denial must be provided to the individual. A statement that the individual "failed to score high enough" is insufficient; the reasons must be specific.

Applying for New Credit
It is thought that when you apply for credit your score is impacted. FICO states that your score is not likely to be greatly impacted by rare or occassional credit inquires. However, multiple credit inquires (to credit cards, personal loans, home loans, etc) in a short time period will appear on your credit report. So applying for new credit can negatively impact your credit score temporarily. However, applying for several auto and home loans in a short period of time is usually treated as a single inquiry (to help encourage consumers to shop around)..