More than likely you have heard of a credit score rating, but you may not have every paid much attention to yours. Believe it or not, what you don't know about your credit score can be negatively impacting your life without you even knowing it. It is imperative that you learn more about your credit score, what it is, and what you can do to improve it. Your credit score rating, also sometimes known as a FICO rating or FICO score, is where they come up with a score that is a three digit number that represents your credit information. This score is extremely important, so let's take a closer look at how it can affect your life.

Your credit score has an impact on just about every aspect of your financial life, and having a score that is calculated lower than it really should be has a negative impact on you. When your score it high, your credit rating is also high and you typically have little problems in getting approved for loans and new credit. The higher the number, the better qualified you appear to be to potential lenders.

A special formula is used to calculate the three digit number which represents your credit score. Typically these numbers are between 300 and 850 as they are calculated using the FICO method. The score is derived by looking at various different factors for your credit and credit history. About 35% is related to your payment history and your on time payment performance. About 30% depends on the total amount of money that you currently have as outstanding debt. About 15% of the score relates to the length of time that you have a credit history available, or how long you have had these accounts. The remainder reflects new accounts recently opened and the number of different types of accounts you have.

If you have a credit score that is over 750, this is considered to be an excellent score. A score over 720 is pretty good, 660-720 is considered to be acceptable or average, but below 600 is poor. If you have a score below 600, you definitely need to start working on your score to improve it or you may begin having problems with your finances.

Whether or not you qualify for a new loan or line of credit is determined by your credit score. This includes your eligibility for loans, mortgage, and credit cards, and what interest rate you will be assessed, or even if you will be approved or not. It can also affect whether you need to leave a deposit when renting a home or buying a car.

It should be your goal to raise your credit score and there are many things you can do. First and foremost, pay each of your bills on time every month, which will establish a good payment history. For your credit cards, keep your outstanding balance well below your credit limit, ideally around 30% of your credit limit or less. Take care to never exceed your credit limit. Do not open a bunch of new accounts over a short period of time, since this type of activity is easily seen on your credit report.

As you can see, your credit score rating is extremely important. Take the time to find out what your score is so you'll know how it is impacting your life. If your score is less then satisfactory, then start working to improve it to insure a better financial future.