You may not even know that you have a credit score, but you do--and it's used by credit card companies, home equity lenders, auto loan lenders and finance companies when you apply for credit or a loan. Produced with a computer model created, most often, by Fair, Isaac & Co. (or "FICO," leading to the somewhat generic term "FICO score"), a credit score is intended to be a snapshot, or summary, of your credit history. A low score can mean you don't get a credit card or loan, or that if you do, you will pay a higher interest rate. Some lenders use what it is called "risk-based pricing at the point of origination," which means the lender instantly approves--or denies--your application, using your credit score and other information to set the "price" for your loan.

• Payment history (35%). Your score is negatively affected if you have paid bills late, had an account sent to collection or declared bankruptcy. The more recent the problem, the lower your score--a 30 day late payment today hurts more than a bankruptcy five years ago.
• Outstanding debt (30%). If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score. A low balance on two cards is better than a high balance on one.
• Length of your credit history (15%). The longer your accounts have been open the better.
• Types of credit in use (10%). Loans from finance companies generally lower your credit score.
• Recent inquiries on your report (10%). If you have recently applied for many new accounts, that may negatively affect your score. Promotional inquiries don't count.

Credit scores range from 400 to 900, with the average around 700. According to the model, as your score increases, your risk of default decreases. Industry experience shows a direct correlation between low scores and high default rates. This means that you may have a hard time convincing a creditor to make you an affordable loan (or any loan at all) if your score is far below average. But just as your credit history can vary from credit bureau to credit bureau, so can your credit scores. It is possible to have a high score with one credit bureau (Equifax, Experian, or TransUnion) and a low credit score with another, just as you might have a clean credit history with one bureau and a muddied record with another.

Wide-ranging credit scores are rare, however, although some lenders admit to seeing borrowers with scores that vary by 100 points or more. To combat this, a lender usually uses the middle score, but that can be of little comfort if you have scores of 550, 570, and 700, and the interest rate for a borrower with a score of 570 is two points higher than the rate for a borrower who scores 700. Narrow ranges are more typical. For example, a person with good credit might have scores something like 685, 702, and 710.

• pay your bills on time
• update old accounts (accounts reporting a balance may have been paid down to zero)
• don't max out your credit lines (keep your balances below 30% of your credit limit, perhaps by carrying small balances on several cards rather than high balances on one or two)
• limit the number of times you apply for credit
• maintain your accounts for a long period of time, and
• stay away from finance companies.

To learn more about credit scoring--particularly its pitfalls--you might want to visit the website of credit scoring's most strident critic, Greg Fisher. He beat the scoring proponents to the punch by scooping up the web address http://www.creditscoring.com, from which he launches often strident, sometimes wacky, but usually well-documented attacks on the credit-scoring concept and the industries that support it.