So what actually makes up a FICO score? Good question! Until recently, nobody knew. But now, it's understood that credit scoring is a calculation lenders use to make their lending decisions, and consumers are gaining insight into how these all-important scores are calculated... and what they can do to affect the ultimate credit score.

Your credit score is a mumber value extracted from the information in your credit report. It reveals to lenders just how likely you are to repay loans and credit card bills on time.

But that's not all.... your FICO credit score goes so far as to affect whether you can even GET credit and how much you will pay for the privilege of getting that credit.

Usually,the rule of thumb in the lending industry is this: the higher your credit score, the more likely you are to be approved and to pay a lower interest rate on new credit.

To determine your individual credit score, most lenders use a system developed by Fair Isaac Corporation. (Hence, the abbreviation "FICO.")

There are five factors that comprise your credit score. Each factor counts as a percentage of your total FICO score. They currently are:

• your payment history (35 percent);
• how much you owe (30 percent);
• the length of your credit history (15 percent);
• new credit (10 percent);
• and and host of other factors, such as having a mix of credit types in your credit report (10 percent.)

FICO scores typically range from 300 to 850. Most lenders consider scores of above 700 as good.

So, if your credit score is lower than you would like and is winding up costing you money, financial experts suggest you take free steps -- like those found on this weblog -- to build up your score.

The good news is that your FICO score is not set in stone. It is always changing, up and down, depending on your credit habits, so establishing good credit practices starting today will help improve your credit score.

To learn more answers to frequently asked credit questions, check out our new Credit FAQs.