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Having a good credit score is vital to your financial well-being, and it is nearly impossible to be financially successful without it.

The higher your credit score is, the less you're seen as a credit risk. So, what is a credit score? t's a three-digit figure computed from a credit report and used by lenders to find out if you!re credit-worthy. n other words, your credit score helps a lender determine the chances that you will repay them on time if they grant you a loan, credit card or mortgage. "ccording to a #uke $niversity personal finance website, your score impacts not only your loan%credit approval but also how much interest rate you will get on your loan. Different Models, Different Scores There are three main credit bureaus in the $nited States& '(perian, ')uifa( and Trans$nion. 'ach bureau uses their own model in calculating credit scores. 'ach model of credit scoring uses a different scale. *or e(ample, '(perian scores can range from +,--./- while ')uifa( scores can range from 0.--.1- and Transunion scores can range from +---.1-. There's also what's known as the 2antageScore, which is developed by the three bureaus and ranges from 1-3 to as high as 44-. What's all the fuss with FICO? 566 7oney e(plains that the most-used, credit scoring model was developed by *air saac 5orporation 8or * 59:, a company that provides underwriting services to financial institutions. "ll of the three ma;or credit agencies use * 59 scores. "ccording to "bout.com, each bureau will give you different * 59 scores based on their own computation and the information they have on file about your credit history. What is a Good Credit Score? " <ahoo *inance article says the number you want to aim for--to show you have ideal credit standing--is at least =0- or higher. f your score is within ,=1-=34, you will still be able to obtain a good loan but you'll typically pay .-1 percent more interest than someone with a higher score. <ou can e(pect to pay even higher interest 80 percent or double-digit rates: on loans if you have a score lower than ,=1. <our chances of approval also decrease along with your score. How do Credit Scoring Models Work? >hile credit scoring models vary, they generally do the same things to determine credit scores. *irst, they will look at the credit history profiles of a large group of consumers, which typically number over a million. The profiles are e(amined to determine prevalent variables. ?ased on these variables, a statistical model will then be built to best forecast future consumer behavior. 'ach variable is given corresponding weight. n reviewing credit history to calculate a credit score, often the biggest factor is payment history or whether the individual is delin)uent in making payments.

What Factors I !act "our Credit Score? Since lenders do not use the same standards in determining what a good credit score is, it's crucial to build a good score and maintain it, so you can get the best chances of loan%credit

approval as well as the best interest rates. n general, your credit history is the primary basis of your credit score. n a credit report, the factors that will impact your score include&

<our accounts& how many, what type and how old are your personal financial accounts? #ebt& how much do you owe in total? #elin)uent payments& what is the fre)uency and gravity of your late payments? <our public records.

"ccording to $.S. law, when calculating your credit score some of your personal information should never be considered, such as& your race, national origin, se(, marital status and religion. <our age and area of residence are also not to be considered. 5redit scoring models also do not take into account your employment details, including your occupation or ;ob title, salary, employer or employment history. However, do note that your lender may look at your employment information during its own loan-approval process. #now "our Credit Score t is recommended that you find out what your credit score is before you apply for a loan or credit card so, if necessary, you can take steps to improve your score and chances of getting approved. "fter knowing your credit score, obtain your credit report to determine the specific areas that you need to work on and continue to monitor your credit history over time. "ccording to >ikipedia, "merican consumers are entitled to obtain one credit report, at no cost, every 30 months from all the three ma;or credit bureaus, but they are not entitled to know their credit scores for free. >hile you normally have to pay a fee to get your credit score, there are companies that can provide it free. 7ake sure you know which score you're getting. *or instance, your credit score at 5redit Sesame comes from '(perian, while other companies may use your Transunion credit score. @nowing your score and improving it will better your chances at credit approval and save you money in interest.