The range for the FICO system is 300-850 with the median score being 723. A good score is anywhere from 620-700, which means that you will most likely be able to attain a better interest rate on a loan than others with a score under 620.

A bad score is anywhere from 600 and below. Basically what this means is that you’re in trouble and you need to get working on paying your bills on time. With a score like this you’re also looking at much higher interest rates and not as good of terms as your friends above with their 700 score.

A score is determined by 5 different areas. The first being payment history, this accounts for 35% of your score. Next, your credit utilization, which means the “amount owed”, accounts for 30% of your score. 15% goes towards the length of your credit history, while 20% is divided equally between the types of credits used and the recent search for credit.

The three major credit bureaus in the United States, Equifax, TransUnion and Experian all use this credit score to determine your worthiness to creditors. You’re legally allowed able to obtain a free credit report from one or all of these companies from annualcreditreport.com so that you can check your score prior to applying for a loan or credit card. If you know your credit score prior to applying you’ll able to have a better understanding of what types of terms you are eligible for.

You are entitled to one free credit report in a 12 month period, but with a little ingenuity you can monitor your credit more often.  A common technique for this is to obtain one credit report from one of the credit bureaus every 4 months.  Since, for the most part, all three bureaus will have more or less the same information you can use this as a poor-man’s credit monitoring service.