Your FICO score

FICO scores are calculated by examining the answers to number questions, based on the information in your credit and on your income-to-debt ratio. A good FICO score would be at least 650. Perhaps you're familiar with the FICO scoring system used by credit companies to determine a potential client's creditworthiness.

First, let's define the acronym FICO. When they're all added up, that number represents your FICO score. Paying all your bills on time will raise your FICO score. FICO places a 30 percent emphasis on the amount of money you owe and your available credit. FICO also asks the total amount of credit you have at your disposal.

Some 15 percent of your FICO score comes from the length of your credit history. Simply put: the longer you've been using your credit, especially if it's been with the same companies, the higher your FICO score will be.

FICO puts a 10 percent value on the overall mix of your credit. The more types of loans you've had, the better, as far as your FICO score. If you've had car loans, credit card payments, various types of installment loans, and a mortgage, you'll receive a higher FICO score.

Your FICO score also gives you a 10 percent premium if you've sought new credit within the past year. Your FICO score can determine the percentage rate of your car or home loan, and may even get you a lower rate on your credit cards.