How to ace your credit score

You can get a free credit report every 12 months from each of the three major credit-reporting agencies. Here are the six most important things that you need to know before you delve into your credit history.

By Denise Topolnicki, Money Magazine contributing writer

(Money Magazine) -- A report is not a score. You can get a credit report - a history of credit-card payments, mortgages and other loans - for free at

A credit score, however, will cost you. The one most commonly used by lenders is a FICO score. Each bureau's report on you may generate a different FICO score because the bureaus may have somewhat different information on your credit history. To order one bureau's FICO score from costs $15.95. To order all three will cost $47.85.

You want a score above 760. Scores generally range from 300 to 850, with most folks clustered in the 600s and 700s. Tumble below 620 and you fall into subprime territory, if you can even find a lender to do business with you. Score above 760 and you'll get the lowest interest rates available.

Some slip-ups count against you more than others. Your bill-paying history counts for 35 percent of your score. How much you owe contributes another 30 percent. Other factors are how long you've used credit (15 percent), how often you've applied for credit (10 percent) and what types of credit (such as cards and car loans) you use (10 percent).

You can find out why your score stinks. A credit reporting agency must tell you which factors negatively affected your number. For example, your report might note that you have several late payments on your credit report. Knowing what you've done wrong can help you change your behavior and improve your score.

It's not only lenders who check you out. Some insurance companies use your number to set your premiums. Phone companies, landlords and employers may also look at your score to decide if they should give you a cell-phone contract, rent an apartment to you or hire you.

It's never too late to improve. Credit scores can change daily, so get cracking now. First correct any errors in your credit report. Pay your bills on time and keep your credit card balances low. Instead of transferring debt to a less expensive card, pay it off. Finally, apply for new cards only when you need them. Top of page