What’s your credit score? When was the last time you checked it? If it’s low, you may be facing some extra loops and hurdles that could certainly be avoided it was higher. Unfortunately, your credit score is one of the most important numbers in your life, since it signals to the financial world how reliable you are. A high score means lenders will vie to loan you money at the best rates.

Make some mistakes such as paying bills late or not at all and your low score means you can expect to pay thousands or even tens of thousands of dollars in additional borrowing costs. And if you rack up chronic late payments or bankruptcies, you might not be able to borrow at all.

Nearly 40 percent of U.S. consumers are graded “exceptional” or “very dependable” by Fair Isaac Corp. (FICO), the largest provider of credit scores. The FICO score scale ranges from 300 to 850. The average score in the U.S. is 695.

To qualify for the best mortgage rate, you’ll need a score of at least 740. The best deals on auto loans go to borrowers with scores higher than 720. But don’t panic if your score isn’t on the high end of the scale. You can improve your credit score over time although doing so requires discipline and focus.

Factors that affect your credit score 
Many things can affect your credit score. Simply shopping for a mortgage can drop your score by 20 points for a few months. That’s because the lender will make a “hard inquiry” on your score, a sign that you’re about to borrow money.

If you’re comparing mortgage options from more than one lender, you should do so within a limited period of time, says financial writer Lita Epstein, author of “The Complete Idiot’s Guide to Improving Your Credit Score.” If the inquiries are just a week or two apart, the credit agencies will consider them to be just one event.

One of the best ways to raise your credit score is to pay down your credit cards. Paying off your cards or getting the balance down to less than 20 percent of your card limit may raise your score by as much as 100 points.

Applying for a new line of credit, on the other hand, will lower your score. If you have an old account that you don’t use anymore, don’t close it out. You could end up shortening your credit history, which will lower your score. Missing a payment can drop your score too, so do your best to pay everything on time.

If you do miss a payment, contact your lender immediately. If you have a good track record, the lender might not report the infraction. Or, if you have a hardship such as medical bills, a divorce, or a job loss, the lender might work with you. Mortgage lenders can cut you a break by taking a payment onto the end of the loan, Epstein says.

Not surprisingly, filing for bankruptcy or losing your home to foreclosure will significantly drop your credit score. Epstein says that scores generally plummet to 400 after bankruptcy, but the score isn’t permanent. Within six months of filing for a Chapter 7 bankruptcy, expect to start receiving offers for secured credit cards, which require a cash deposit.

“They usually cost a lot, but they can be used to re-establish credit,” Epstein says. “If you pay on time, you can get a regular credit card in six months to a year.” With diligence, you can boost your score back up into the 600s in two years.

If you can’t avoid foreclosure, you’ll face a long slog to rebuild your credit score. The good news is that as time passes, the bad event will recede into the background of your credit history. To rehabilitate your credit score, stay current on any other credit accounts you have.

How to find out your credit score 
Knowing your credit score is a big step toward protecting it. Experian, Equifax, and TransUnion, the three main credit reporting agencies, track a variety of transactions, including student loans, credit cards, car loans, mortgages and medical payments.

Your credit history shows whether you’ve paid on time and, in the case of credit cards and other lines of credit, how much of your available credit you use. This history also compiles bankruptcies, foreclosures, and legal judgments.
It might seem a bit unfair that lenders all know your credit score while that same number can be a mystery to you. Fortunately for consumers, credit scores are becoming a bit more transparent.

For instance, many credit card issuers now tell you your FICO score for free as part of their normal services. If you have a credit card with one of these companies, problem solved. Meanwhile, you can get VantageScores for free from these sources:

• Credit.com
• CreditKarma.com
• CreditSesame.com
• LendingTree.com
• Bankrate.com
• Quizzle
• QLCredit

You can use these sites to check your credit score and to monitor how it changes over time. Or you could pay FICO for access to your score. The company’s myFICO.com site will reveal your score; prices start at $19.95 a month.

Free credit reports 
You can get a free credit report from

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