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How your Credit Score and FICO score is calculated, and how to improve your score.

Payment history, Credit history length, debt, credit applications, how to improve your score.

A persons credit score is vital in determining if they will get a loan or credit and at what interest rates. Many stores provide Store credit cards that promote instant 10%-30% savings if you open the card with the store. Problem is if you open too many store credit cards in a short time, even if you pay for them, this can negatively impact your credit.

Credit scores are a measure of credit risk. They help predict a person's future in regard to paying his/her bills. A persons income usually does not count here because one can have high income but still not pay their bills.

Credit score is determined by using several data points collected from the three credit bureaus (Experian, Trans Union and Equifax). Credit score ranges from the lowest (300) to the highest (850).

This number of credit score comes from an evaluation of five categories of a persons characteristics. These include:

   Payment history (35% of the rating).
   Length of credit history (15%).
   New credit applications (10%).
   Types of credits used (credit card, loans, store cards etc) (10%).
   Persons debt (30%).

All these factors combined help come up with a person's credit score and FICO score. The higher the score, the lower the risk you are to give credit to and this means you will get lower interest rates on loans.

Note that FICO score is short form for Fair Isaacs Corporation Score.

Everyone is entitled to a free credit report every year per the Fair and Accurate Credit Transactions Act of 2003.

You can get your free annual credit score from and you can get your FICO Score from

The various ways to raise your Credit score and FICO scores include:

   Paying your bills on time.
   Don't close your old credit card accounts.
   Minimize new credit card applications.
   Keep your credit balances low.