My sister is 37 weeks pregnant and her dr told her she was a 3 of 7 points instead of telling her how far dialated or effaced. What does that mean?

He may be using a form of bishop's score where points are given for the various changes a cervix will show as the due date nears.
The cervix goes through several changes in preparation for birth, so this may be what her doctor is referring to.
The higher the number, the more changes that are evident that her body is preparing.
She should give him a call and ask him to explain the numbers so she can know for sure if this is what he meant or, if not, what the numbers mean.