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. Also, some lenders use your credit score and other information to set the "price" for your loan.

Factors Affecting Your Credit Score

• 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.
• 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.
• Types of credit in use (10%). Loans from finance companies generally lower your credit score. FICO says this is most important when there isn't a lot of other information upon which to base a score.

Although this is a good guide as to what credit scoring companies deem important, keep in mind that some companies may consider different factors.

Among the items that credit scoring companies cannot consider are age, race, gender, education, national origin, marital status and receipt of public assistance.

What the Numbers Mean

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.

How to Get Your Credit Score

Although Fair Isaac is the only credit scorer to voluntarily disclose consumer credit scores, if you live in California and are shopping for a home mortgage, you can still get your credit score, even if it's from a company other than Fair Isaac. This is because a new California law requires mortgage lenders to disclose credit scores to loan shoppers starting July 1, 2001.

Improving Your Credit Score

• 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.

Finally, you should not give up hope just because you have a low score. If you think the problem is caused by mistakes on your credit report, you should get a copy of your credit report, fix the problem, and explain the situation to the lender. Most lenders will override credit scores if they think you are a good risk despite problems with your score.

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.