Your credit score, sometimes called a FICO score, is a number based on the information in your credit file that shows how likely you are to pay a loan back on time – the higher your score, the less risky you are.

The three major credit bureaus: Experian, Equifax and Trans Union. The credit bureaus write up your report based on information they received about you from companies that gave you credit in the past, such as your payment history, the length of your credit history, the types of credit you have and amounts owed. From this report, a credit score is derived –which ranges from 300 to a perfect 850.

Any late payments you made will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

Under the Fair and Accurate Credit Transactions Act, you can obtain one annual free copy of your credit report.

For more information visit www.annualcreditreport.com or call 877-322-8228. You will still have to pay a fee to get your scores.

The following tips will improve your rating:

Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by simply paying all their bills on time for one month.

Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

Don’t open a number of new credit cards that you don’t need. New accounts will lower your average account age, which could actually lower your score up to 10 points.

Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be a higher risk than someone who has managed credit cards responsibly.

Closing an account doesn’t make it go away. A closed account will still show up on your credit report and may be factored into the score.