Do you know your credit score? You should. A credit score can determine your eligibility for the basics of life. Your credit rating affects your ability to purchase a home, land a good interest rate on loans, or even get a job. It represents the risk of non-payment that you present to a lender.

Usually, credit scores fit into any one of five classes: exceptional, very good, good, fair, and very poor. Your credit card reports determine your credit score. If you have an exceptional credit rating, you could end up paying a much lower rate of interest on debt because your perceived risk of default is much less than that of a person with a fair credit score. You will have little to no problems obtaining a loan if your credit score is at least good. However, you can still receive credit cards for fair credit. If you have a very poor credit score, you may not be able to obtain loans.

Credit scores are not a one size fits all

The ratings between different credit scoring agencies will differ slightly, although they all use the same principles to calculate credit scores. Most companies are not willing to let you know the algorithms and specific factors that they have put into consideration to arrive at your credit score.

Your credit score may vary between bureaus because of two reasons. One, every credit bureau has its own records of your credit profile. You can check your credit report online for free from the various bureaus at least once a year to ensure that each of them has accurate and up-to-date info about your score. The second reason is, of course, that different bureaus will weigh the information leading up to your final score differently.

Free credit score reports

You can check your free credit report at AnnualCreditReport.com. There are also other companies that offer free credit score reports, but you have to sign up for a free trial period, after which you will begin to pay for the service. You can use these services if you are concerned about identity theft, or when you are building your credit profile, and you need to monitor your progress. If, however, your need for a credit card score is casual, you do not need to part with monthly fees to pay for a monitoring service.

Some factors that determine your credit score

Two major factors that affect your credit rating are your history of making payments and the amounts of money you owe. If you score high on these factors, you are likely to have a high credit score. Other factors that determine your credit score are the type of credit you are using and if you have any new credit.

The range of credit scores for FICO

The FICO credit score is the most popular among lenders. The FICO score also varies based on the scoring of the three other major credit bureaus in the US, which are Experian, Equifax, and TransUnion. For Experian, the credit score ranges from 330-830. The rest of the bureaus have a range of between 300 and 850.

FICO considers a score that is below 579 to be very poor.  A score which is between  580-669 is fair, while that between 670 and 739 is good. If you have a credit score of between 740 and 799, you fall under the very good credit score category. Scores from 800 and above 850 are considered exceptional.

How to improve your credit score

You want to have the best credit score so that your process of obtaining a loan can be smooth. You will also enjoy lower rates of interest as your credit rating goes up. Other benefits of a better credit score are being liable for lower monthly payments.

You can work toward an impressive credit score by paying your bills in time and ensuring that you use no more than 30% of the credit you have available at a given time. You should also avoid taking a loan unless you must. Do not also be tempted to use different lines of credit at the same time. Additionally, check your credit reports at least once in a year and dispute any errors present.