A simple number can keep you from getting a loan for home improvements. It can keep you from leasing a new apartment and can even cause you to pay higher interest rates or deposits. What kind of number has so much power over everyone’s lives? Your credit score.

A credit score is the number that lets places like loan companies know how likely you are to make timely payments on loans. This score is included in a credit report. Credit scores dictate whether a person can obtain credit and how much he pays for credit cards, loans, mortgages, or apartment leases. People with high credit scores are usually approved for new credit. They also pay lower interest rates. Landlords often check credit scores to determine whether or not to rent someone an apartment. It may also help electric, telephone, and gas companies decide how much of a deposit should be paid for services. Good credit scores will influence lenders to send credit card offers to your mailbox. Once approved for a credit card, credit scores determine a person’s credit limit and interest rate.

Credit scores are developed by FICO (Fair Isaac Corporation). Scores range from 300 to 850. The majority of people have scores in the 600s or 700s. Lenders purchase this score from three different credit bureaus or reporting agencies:  TransUnion, Equifax, and Experian. If a person’s FICO score is below 600, that person is considered a high risk, and his credit application may be rejected. If it isn’t rejected, he may often receive a higher interest rate than someone with a strong credit score. FICO calculates this all-important score by factoring payment history, the amount owed on all accounts, credit history length, and whether or not someone has recently applied for credit.

A person’s credit score constantly changes. For example, scores can be improved by the way a person makes payments on time. On the other hand, a good credit score can quickly deteriorate if that same person gets behind on his bills. Consumers need to always be aware of the fact that credit scores are linked to the way they manage their financial affairs.

There are a variety of ways to raise your credit score. The first way is to pay bills in a timely fashion. If you do so, you will be considered more credit worthy. Next, make sure your credit card balances don’t get too high, and avoid transferring your balances to different credit cards.

Concentrate on paying those balances down. Apply for new credit responsibly, doing so only when necessary. Finally, review your credit report on a regular basis so that you can notify the credit reporting agencies of any errors. If you do so, the agencies can correct the mistakes, ultimately leading to a higher credit score.

In order to keep tabs on your credit report, you can contact a variety of agencies and pay a small fee to obtain your credit history. The three major reporting agencies all have web sites consumers can visit in order to receive a report.  Striving to earn or maintain a good credit score isn’t always easy, but it’s possible to achieve if you keep track of your credit report, pay bills on time, and apply for credit in a responsible manner.