Your credit score, also known as a FICO score, is an actual number between 300 and 850. FICO is an acronym for Fair Isaac & Co., the company that is responsible for tabulating your credit score. A credit score of 700 or above is generally considered good and a score of 800 or above is considered to be excellent. However, most scores fall between 600 and 750. Higher scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed. 

Each of the three main credit agencies -- Experian, Equifax and TransUnion, have a score for you based on your credit report at that individual agency. The agencies tend to have different information on the people they track, which means your credit report and score will vary from agency to agency.

The scores are decison-making tools that potential creditors, landlords, and insurers use to help them anticipate how likely you are to repay your loan on time. That's why better credit reports and higher credit scores make it easier and cheaper to borrow. It also makes it easier to rent an apartment or buy a house, get a job, buy insurance, and a number of other day-to-day essentials.

Sources of Data

Credit scores are the results of a compliation of several different sources of data that are available in your credit report. The data falls into 5 categories, which are listed in order of how much weight they have in informing your score:

• Payment history (35%)
• Amounts owed (30%)
• Length of credit history (15%)
• New credit (10%)
• Credit mix (10%)

Avoiding a Bad Score

There are two ways to have a bad credit score. The first, is by not using credit wisely. That means spending more than you can afford, not paying your bills on time, and having too much outstanding credit. The second, you can have a bad credit score if you don't use credit at all. So simplfy never using a credit card isn't the path to a high score.

Source: Experian.com