by Rachel Mclaughlin

Created on: May 18, 2008   Last Updated: June 09, 2008

Know Your Credit Score

What is a credit score history and why is it so important?

For the majority of us credit reports and scores remain a vast enigma, a puzzle filled with endless headaches and therapy sessions. However, as frustrating as it may seem, a credit score in ordinary terms is a snapshot spanning seven years of your credit use. Past payment history accounts for thirty five percent of your score, the amount of money you may owe various lenders holds a whopping thirty percent of your score, how long these debts have been in collection accounts for fifteen percent, and the amount of new credit that you apply for affects only ten percent of your score. Your credit score aka the range' indicates to lenders how likely you will be to payback a loan in full and on time.

What is the range' and what does it mean?

Many of us have heard of FICO at least in passing. This acronym can stand for many things but in regard to your credit it refers to the Fair Isaac Credit Bureau Systems. FICO has a score scale, also known as the range' that begins at three hundred and ends at eight hundred and fifty. If your score ranges between seven hundred an eight hundred and fifty congratulations! You are what lenders refer to as a prime borrower' and it's likely that you need not read any further. If you range between six hundred and twenty and six hundred ninety nine then you are what lenders refer to as a sub-prime borrower' and have an overall OK score but need a little improvement, but if your range is below this than you are high risk' and the lower the number the worse it is. Do not lose heart though, with a lot of time, effort, and diligence you can eventually bring yourself into the prime borrowers' category, sometimes all it takes is just a little understanding.

How often should your credit be checked and how does it affect your credit?

So, when should you check your score? It is recommended that you check your score and credit report at the very least once every four months. Still, the best answer for any individual will depend upon their own unique personal and financial variables. For example, if home-buying plans are on the horizon what you don't know about your credit can hurt you. Successful home purchases rely heavily on timing and it is better for you to know any discrepancies you might be facing ahead of time rather than to wait for the final verdict from a creditor. Checking your credit report does not hurt your credit score.

A few things to remember:
1. Your

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