Ever wondered how and why you can go online and be approved for credit within seconds? Or receive a pre-qualified loan or credit card without anyone asking how much money you make? Or why one interest rate is made available to your neighbor and another to you?

The answer is credit scoring, a term more and more Americans are learning about, but still often misunderstand. Your credit score is a number generated by a mathematical formula based on information in your credit report. This information is compared to information on tens of millions of other people and the resultant number is a highly accurate prediction of how likely you are to pay your bills.

Credit scores are used all the time, and if you've applied for a mortgage, a credit card or even a mobile phone the rate you received was probably directly related to your credit score. People with the highest scores get the lowest interest rates: The higher the number, the better you look to lenders.

Scores range between 350 and 800 and most people have ratings that range between 600 and 800. A score of 720 or higher is the equivalent to a grade A – and will allow you to get the most favorable interest rates from a borrower.

Unfortunately those at the lower end of the scale constitute a greater risk in the minds of lenders and are charged a higher rate of interest. It seems wholly unfair: the rich get charged less; and those most in need of credit more. But the way lenders see it, borrowers with lower credit scores are charged more to offset the risk to their investment.

Perhaps because of this, the idea of having a lower credit score carries a kind of stigma in some minds. But if you have a poor credit rating don't worry – you're certainly not alone. People with a poor credit rating number in the tens of millions. In fact a recent survey revealed that nearly one in seven Americans have credit scores below 600; and a further one in ten rate between 600-650.

Having a bad credit rating is nothing to be ashamed of and can happen to anyone. Given time, patience and some work a bad credit rating can be changed for the better, meaning better rates for you.

There are many different ways you can go about getting a new credit card when your score isn't entirely up to scratch. Nevertheless, the first and most important thing to understand before you borrow any money is this: You must have sufficient income to pay your current bills and overheads PLUS your credit card repayment.

If you're sure you're ready for that sort of commitment, the secret behind successfully applying for a credit card is simple. Lenders love stability. The more routine you have in your life, the better the chances of them lending you money with a credit card, and the better the terms of the deal.

No one is going to take a chance on you if you don't have a steady and sufficient income. Most lenders want to see you at your current job for at least a year or more. The longer you work for the same employer the better the chances of you getting financed. Working in an industry where a certain amount of routine is par for the course is ideal. Think teaching, law or medicine. Lenders love doctors, lawyers and teachers because of the stability their jobs provide.

Credit card companies don't like nomads. Ideally, they will want to see you at your current address for a year or more. Naturally, the longer at the same address the better.

If your credit is borderline, or if you simply have no credit you might have someone who is willing to act as the primary card-holder and have you as an additional name on the account. Of course, this person must have a good credit rating and meet the lender's credit-scoring criteria. But this can work well to give you a foot in the marketplace. If you're an immigrant, but have followed a relative who has been in America for a few years longer, this can be a good strategy to help to start to build up a credit history. Once you're ‘in' the system, you're underway.

Chances are, unfortunately, that if you do get a credit card with a low credit score, you won't see a low interest rate. Merely paying off the minimum balance each month is also the most expensive way of borrowing money and will cost you a good deal of money over the length of the repayment. Aim to use your credit card for short term debt, and pay back the amount in full whenever you can. Some lenders will also put a low credit limit on your account – which is not always a bad thing.

Don't be put off by any of this. If you take the long-term view, as far as your credit rating goes, borrowing money with a credit card and meeting the repayment deadlines will push it ever further up. You might not get the best lending terms first time around, but if you can prove that you're a good borrower, you can expect a higher credit rating and more favorable terms on your credit card next time around.