You know your Social Security number, your PIN number, an access code here, a password there. But do you know the number that will cost-or save- you thousands of dollars? Your credit score is a number that banks use to determine whether you qualify for credit- and if so, how much interest they'll charge you.

Q: What is a credit score?

A: Your credit score represents your credit worthiness: how likely you will pay your bills and pay them on time. The Minneapolis-based Fair Isaac Corporation (better known as FICO) was the first to boil down your credit history, a detailed report on how you borrow and repay your debts, into a single three-digit number. The FICO scale ranges from a low 300 to a high 850. The higher your score, the more likely you will qualify for the lowest interest rates. FICO gives its formula to the three credit bureaus -Equifax, Experian, and Transunion- and they apply the math to your credit reports. Each pulls information from a slightly different network of lenders to compile its own reports on you.

 Insurance carriers and phone companies rely on the scores to decide if you're a good credit risk. A prospective boss and landlord may turn you down if your score doesn't measure up.

Torrey Shannon and her husband, Dan filed for bankruptcy in 2002. "We've cleaned up our act," she says, "but if you look at our scores, you'd assume we're deadbeats. Not a day goes by that it doesn't affect us. We Can't get a home until 2012."

How your score is calculated may seem mysterious, but it's essential to know your number and how to make it work for you.

Q: How is your Score calculated?

A: Your score reflects how well you managed your debt. Black marks such as a late payments remain on your record for seven years. (for some forms of bankruptcy it's ten years.) There are factors that don't affect your score: employment status, income, debit card habits, savings, bounced checks, overdraft fees, utility bills, and late rent (if the issue hasn't gone to court).

Here's what the bureaus use to calculate your score....

35% comes from your Payment History

30% comes from your Amount Owed

15% comes from the Length of Credit History

10% comes form New credits

10% comes from the Types of Credit Used


Q: Can You Improve Your Score?

A: If you've made mistakes, get back on track as soon as possible, says Careen Foster, director of scoring product management at FICO. "The longer you wait, the longer it takes to improve your scores." In today's brave new world of tighter credit standards, as you need at least 700 to qualify for a card you once could have gotten with a 600.

Check the three of your credit reports at annual, the only site authorized by federal law. Don't be fooled by wacky commercials and computer ads for other "free" sites. You get one free report per bureau year; pull a different one every four month to catch problems sooner.

Check for mistakes. Are there accounts you don't recognize, names that aren't yours, address where you've never lived, an incorrect birth date or security number, inaccurate reporting of delinquencies?

Report errors!! One study found that 79% of all credit reports had mistakes; one in four contained errors serious enough to have a significant negative impact on scores. Report errors to the appropriate credit bureau. It has 30 days to investigate and respond.

You don't need to pay "experts" to improve your score. You don't need to pay for credit monitoring services. Your best strategy: Improve your financial habits so your score goes up and stays up.