What is anchor text?

Anchor text is the visible text, with an underlying URL, that is used to link one website to another or to point a user toward a specific file. Most search engines (i.e. Google, Yahoo, and Bing) use anchor text, as well as other factors, to determine the relevancy of a website when ranking it for a specific keyword. An example of anchor text would be -> Google is Great. “Google is Great” is the anchor text with http://www.google.com being the underlying URL.