It's your right to know what credit scoring agencies are saying about you. Finding out this information is doesn't cost a lot and takes only minutes to do - which may be time very well spent.

Simply put, credit scoring is a method of assessing the credit risk of a loan applicant. It uses mathematical models to evaluate a person's credit worthiness based on their credit history and current credit accounts. The system was first developed in the 1950s, but has come into widespread use in just the last couple of decades.

In the early '80s, the three major credit bureaus (Experian, Equifax and Trans Union) each developed scoring models that allowed them to offer a score based solely on the data of one individual. Creditors, especially those in the home mortgage industry, frequently use these scores when deciding who gets a loan and at what rate. However, it's worth remembering that creditors also consider other information, such as your salary or employment history, when making loan decisions.

Credit scores are reported as a number, usually in the 300-900 range. The higher the number the better the score. Creditors see the number as an indicator that an individual will repay a loan. Typically, scores are determined by reviewing the following data:

• Your history of late payments
• Non payments
• Current level of debt
• Types of credit accounts
• Length of credit history
• Number of credit inquiries
• History of applying for credit
• Bad credit behavior, such as writing bad checks

Personal details such as race, gender and religion are definitely not considered when determining your score. It's also worth noting that each major credit bureau has its own method for calculating credit scores. However, the scoring models have been fairly well standardized so that a "600" score at one bureau is roughly the equivalent to the same score at another.

Overall, a score of 650 or above is a sign of very good credit, and a very good credit score. People with scores of 650 or higher will, all things considered, have a good chance of obtaining quality loans at the best interest rates.

Scores of 620 to 650 indicate good credit, but also may point to potential trouble areas that creditors will want to look at and review. A lender may require additional documentation before a loan will be approved.

With scores of below 620, consumers may find that they can still obtain a loan. However, the process will be lengthier and more involved, as creditors consider scores below this threshold to be an indicator of greater credit risk.

So you've got your credit score report. What numbers do they crunch to come up with it? Where's it all coming from? It's really not all that hard to understand, and learning more about what factors influence your individual number can help you improve your credit score in the years to come. Knowing the Players Three major credit bureaus, Experian, Equifax and Trans Union, calculate consumer credit scores. Each company has developed statistical models allowing them to determine scores based on your own individual credit history.

About thirty individual factors are used to determine your score. Certain factors, such as loan payment history, may carry more weight than other parts of your credit history. Indeed, it's important to remember that each person is different. A factor that may be important to your score might be less important for someone else because of differences in your credit past. Also, each factor's importance can change as your credit report changes and has new information added to it.

There are five broad areas that credit bureaus look at:

• Payment History- Details about credit cards, installment loans (such as a car loan), mortgage loans or finance company accounts are considered. Wonder how that late or missed payment affects you? Well, it shows up in this part of your score, which accounts for about 30% of the total.
• Outstanding Debt- Total amount owed and the ratio of what's owed to your credit limit is factored in for another 30%.
• Credit History- How long have you been building a credit history? How long have specific accounts have been established and how long have you used each account? On average, this category determines about 20% of your score.
• Pursuit of New Credit- Applications for credit and the status of new accounts, including a determination of how recent your accounts are, are looked at for another 10%.
• Types of Credit In Use- The numbers of accounts and the different types of accounts, such as bank cards, department store cards, and installment loans are all considered. This category usually rates another 10% of your final credit score.

Knowing your credit score is important. Perhaps even more important, however, are the reasons detailed in your score report about why your score isn't higher than it is. Possible reasons for lower scores may include:

• Too much debt on existing accounts
• Past delinquency on accounts
• Too many accounts opened in the last twelve months
• Collection history
• Excessive number of accounts with balances owed
• No recent account history

These are action items that you as a consumer can have an effect on. Your credit report changes day to day as you make payments or increase balances. For example, if you pay off your credit cards in full every month and maintain a responsible credit history, your score will gradually start to reflect those balances.

You've pulled a copy of your credit report and are now looking at a tangle of information. You see your last three addresses, a long list of businesses that have checked your report, and dozens of credit accounts. But what does it all mean? Which information should you look at first? Here's a quick rundown of your credit report and the key information on it:

A credit report is a factual record of your payment history and other credit-related items that lenders use to help determine whether to grant you credit. The information on your report is compiled by the credit bureaus, which regularly receive data on whether you make payments on time and how much you owe. Since creditors are constantly reporting new information to the bureaus, your credit report is always changing.

In a word, inaccuracies. Mistakes are not entirely uncommon on credit reports. Sometimes they're caused by simple human error, other times they occur when credit files of people with similar names are inadvertently mixed. Increasingly, unfamiliar or inaccurate information can also be an indicator of identity fraud-when someone uses your name and accounts without your knowledge. Look closely at the following areas to catch mistakes or fraud:

• Personal Information-Are the names and addresses listed on your report accurate? Often, an incorrect address or unfamiliar suffix, such as Jr. or Sr., can be an indication that your file may have been mixed with that of another person. Additionally, a recent address change may indicate that someone is fraudulently opening accounts in your name, but routing the bills to their address.
• Public Records-If any bankruptcies, judgments or liens are listed in this section, make sure they are accurate and complete. Remember, some bankruptcies can stay on your report for up to 10 years while others cycle off after seven years.
• Accounts-You will notice basic information such as your credit limit, current balance, and date the account was opened. Also check out the detailed payment information by month for incorrect late payments or charge-offs.

Remember to check for unfamiliar accounts or activity on accounts that you thought were closed. Someone besides you could be using the account.

• Inquiries-This section shows you who has received information from your credit report and who was given your name during the recent past, as allowed by law. Often, credit grantors will "pre-screen" your credit file in order to offer you special rates. Additionally, inquiries are recorded when you apply for new credit or authorize an employer or insurance company to check your credit history.

If everything looks accurate, then you can breathe easy. Just remember to regularly monitor your credit to make sure everything stays accurate.

If you find a mistake, then you have the right to dispute the information free of charge. You should contact the credit bureau that provided the information and dispute the inaccurate information. You can also contact the creditor and ask that new, accurate information be provided to the credit bureau.

Finally, if you suspect fraud, contact the credit bureaus immediately and place a fraud alert on your report. Then, contact your credit card companies and bank to protect your accounts.