In the United States, a credit score is a number typically between 300 and 850, based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her bills. A credit score is primarily based on credit report information, typically from the three major credit reporting agencies.

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.

Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits.

The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system. While the most widely known score in the United States is FICO (which is most widely used in the mortgage industry), there are many others, such as NextGen, VantageScore and the CE Score.

How to improve Your Payment History

1. Always pay your bills on time. Late payments play a major role in driving down your score.If you have past-due bills now, get current and stay that way. Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports. If your situation is serious, see a legitimate, non profit credit counselor. Avoid the scam artists who promise a quick reversal of your credit problems.                                                                                                                             *Tip: The best way to avoid late payments is to put as many of your bills on automatic as possible. Your mortgage lender, utilities and phone service providers are happy to take their payments directly from your checking account each month. Online bill-payment systems are another way to ease monthly check-writing chore, and many provide reminder services so you don't forget a bill.

2. Keep Debt to a Minimum

3. Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down.

4. Don't close unused accounts, because zero balance might help your score.

5. Don't open new accounts that you don't need as a quickie approach to altering your debt-to-credit-limit ratios. That can lower your score.Time is the only thing that can improve this aspect of your scores, but you can manage it wisely:

6. Don't open several new accounts in a short period, especially if your credit history is less than three years.

7. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly.Manage New Credit Wisely. Several credit inquiries during a short period means you are attempting to open multiple new accounts, and that lowers your credit scores.Credit scoring software usually recognizes when you are shopping for a single loan within a short period of time, such as a home loan. If multiple inquiries are necessary, have them pulled as closely together as possible.

8. Do try to open a few new accounts if you've had credit problems in the past. Pay them on time and don't max out your credit limits.

9. A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.

10. Having many installment loans can lower your scores since payments remain the same until balances are paid in full.

11. Don't open new accounts just to have several accounts or to attempt a better mix of credit.

12. Closing an account doesn't remove it from your report. It may still be considered for scoring purposes.

Major Credit bureaus

The three major credit bureaus may be contacted directly at:

Equifax

P.O. Box 740241

Atlanta, GA 30374

800-685-1111

TransUnion

P.O. Box 1000

Chester, PA 19022

800-888-4213

Experian

P.O. Box 2002

Allen, TX 75013

1-888-EXPERIAN