Your score is determined by your credit history. When you pay your bills and loan payments on time, it is recorded in your credit report which leads to your credit score. On the other hand, when you miss a payment, the same action takes place.

Your credit score could increase or decrease substantially because of one financial decision you make. So how do you know when your credit score is good enough for that mortgage loan you would like? How can you tell when your credit score crosses the line from bad to worse?

We all wish there was a chart that comes with your credit score saying "if you have this number, you are fine." But it doesn't work that way at all. Every bank, credit union, and financial institution has their own standards and charts for what is a good, bad or excellent credit score.

Some banks have a minimum credit score to even become approved for a loan, no matter how much your monthly income proves to be. This number can either help you strive or fail when applying for a loan.

The scale ranges from 300, being the lowest score, up to 850, being the highest possible score. In this case, the median score of 525 is not good at all. This number of score would be considered poor and you probably wouldn't be approved for any type of loan.

Now a score above 800 is considered excellent. Those with this high of a score get the best interest rates and know how to pay their bills off in due time. Those scores above 700 are considered good and usually are approved for loans.

The average American has a credit score of 720. If you have a score that is below average and keeping you from that car or mortgage loan, make a plan to increase it.

This is a hard task to accomplish because it takes a lot of time, but it can be done. The best way to improve your credit score is to pay all of your bills in full and on time. Make a repayment plan for any debt that you might have and stick to it.

Don't become discouraged if your lender thinks your score is too low for a loan. Look to other lenders as their standards vary. There are also loans and credit cards available for those with damaged credit scores.

Use a solution like this to help build your credit score. You will see results in just a few months if you take action with your credit score. If you are just building your credit, remember that this is a very important time for your future financial success.