Keeping your credit score high is more important than ever, since a future employer will probably pull your credit history before offering you a job. But do you know how your score is calculated?

In a new survey released last week just 12 percent of consumers have any idea of what a good or bad credit score is. But knowing this information can not only save you thousands of dollars over the life of the loan, it can make the difference between whether you get that loan, or that job, or that insurance policy or not.

Let’s take a look at some of these results. Only 12 percent of consumers understand that if your credit score is in the low 600s, you’ll be denied credit or you may have to pay super-high sub-prime rates. Only about a third of all consumers understand what a credit score does – it predicts whether or not you’ll have trouble repaying your loan. Are you at risk of defaulting on the loan? And just 40 percent of consumers understand that if you pay off your balance, you’ll improve your score.

But what really concerns me is that consumers believe a lot of things about credit scores that are completely wrong. For example, 28 percent believe that using your full credit line is good. So if you have a $5,000 credit line on your credit card and use it all, you’ll have a better score. This is false. And more than half of consumers believe married couples have a joint score. That’s also false.

Here are the different pieces of your credit score and how they factor in terms of relative importance. Your payment history is 35 percent of your score. That looks at whether you pay on time, every month, and if you’re late, how late you are, judgments, charge-offs, and other payment issues. The amount you owe, and the percentage of your credit lines is worth another 30 percent of your score. How long you’ve had your credit, if you’ve kept a credit card for 10 years versus 6 months, is worth 15 percent of your score. New credit, and the number of inquiries on your account, is worth 10 percent of your score. And the types of credit in use, like if you have credit cards and a mortgage and a car loan, is worth the final 10 percent of your score.

There are a few things you can do to improve your score. First, pay your bills on time every month, even if you can’t pay off your bill in full. Next, keep your balances low. Don’t run up credit card debt you can’t pay. How low? Never charge more than 30 percent of your credit line. So if your card has a $6,000 line, don’t run a balance of more than $2,000. Apply for open new lines of credit sparingly. Only do it when you absolutely need to. Finally, check your own credit history and score regularly. You can do that at

I’m often asked if credit repair companies can help consumers raise their credit scores. As we’ve discussed many times on the morning news, these are generally scams that will do nothing for you that you can’t do yourself, and could cost you thousands of dollars and get you into worse trouble. Instead, know that it will take 12 to 18 months to raise your score and that’s if you start paying all your bills on time.

For great information on your credit history and score, as well as suggestions on how to improve your score, log onto It’s a partnership between Equifax, one of the nation’s leading credit reporting bureaus and fair Isaacs, the company that created the credit score that 70 percent of creditors use.

From the website, here is a list of items that are not included in your credit score:

Your race, color, religion, national origin, sex and marital status. US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.

Your age. Other types of scores may consider your age, but FICO scores don’t.

Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.

Where you live.

Any interest rate being charged on a particular credit card or other account.

Any items reported as child/family support obligations or rental agreements.

Certain types of inquiries (requests for your credit report). The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.

Any information not found in your credit report.

Any information that is not proven to be predictive of future credit performance.

Whether or not you are participating in a credit counseling of any kind.

Want to test your knowledge on credit scores? The Consumer Federation of America and Providian Financial have a new Web-based quiz “Do you know the score on credit scores?” Log onto

Published: Sep 28, 2004