When you apply for a loan or credit card from a more traditional lender like a bank or credit union, they’ll usually run a hard inquiry to determine your creditworthiness. Many lenders require that borrowers meet certain credit requirements before they can extend a loan offer. This is because your FICO score or VantageScore credit scores are a reflection of your creditworthiness.
So a good credit score means you’re more likely to repay, while a poor credit score means you could be considered risky to lend to. Your credit score may also be used to determine things like your annual percentage rate, loan amount or credit limit and what type of loan options are available to you.