So in the past, if the bank wanted to decide if they should loan someone money, they'd make you apply for a loan. Then they'd hire a guy to go out and talk with the applicant, and he'd decide whether or not the applicant seemed good for the loan. The applicant would provide things like proof of income, so it wasn't entirely a vibes based decision, but it was heavily influenced by vibes.

Everyone decided that this was a bad way to do things, since it was heavily susceptible to racism/sexism, and was also just super arbitrary. So they got together and came up with an algorithm. You plug in someone's credit history and income, and it spits out a number that tells you how reliable they are, and they get rejected/approved for loans based on this number

Generally people take out loans for houses/cars, so if you want to get a good interest rate, or be approved at all, you need a good credit score. You can also use credit cards in daily life, these help build your credit score but also give you a 1-5% discount on purchases, depending on the details of the card. You get better credit cards with a higher credit score.

Increasing it is done by having more available credit, and by paying loans on time. Age of your oldest line of credit is also important, and it goes down temporarily if you open too many new accounts in a row.