Before anything do you know what a credit score is? If your answer is yes. Congratulations! If you're not so sure, know that it can be associated with a "snapshot" of your credit history, which changes regularly. It is also known FICO score due to the three national consumer credit companies use software to determine the score developed by Fair Isaac and Company. Simply put the higher the score, the better your chances of obtaining credit, it ranges 300 to 850. Although your credit score is just one ingredient in determining if your loan with be approved, it is a significant one and even more so, it is one that you can improve.

Under the Fair and Accurate Credit Transactions Act you are entitled to a free copy of your credit report annually from each of the three national consumer credit companies. A central location has been set up at AnnualCreditReport.com. Here, you can also get your credit score (one from each of the companies) for a small cost.

There are 5 factors used in calculating your credit score: one of them is your payment history, which represents 35percent of the number, it is followed by the amount you owe at 30 percent, it is followed by the length of your credit history - 15 percent of your FICO score and last but not least is any new credit and the type of credit you use with 10 percent each. Why should you know all of this? Because these factors can help you improve your score.
What you need to keep in mind is that when applying for credit, the company will verify your credit report aka credit inquiry. Indeed, too many credit inquiries can lower you credit score, but at the same time opening a new credit and paying it on time will improve your overall score. If your credit score is low, the best thing to do is to pay your debts on time, for a period of time. The logic behind it is very simple, you need demonstrate your ability and willingness to pay your obligations.

For more information on credit score and ways to improve it, visit a-free-credit-score.com