Do you understand what this whole credit score thing is all about?  Well, the American culture and financial system is based on individual’s credit score.  Here are 6 tips to understanding your credit score.

1. Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage.   The higher the score the better your ability will be to acquires better rates .

2. The length of time you’ve had your accounts open has bearing on your credit score.  The longer your account has been open indicates that he or she has been managing credit for some time.   Only one in 20 consumers has credit histories shorter than 2 years.

3. Your payment history will help lenders determine if you are trustworthy. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

4. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.   The more divers the better effect it will have on your credit score

5.  If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

6. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.   If you can, keep new installment payments to a minimum.

For more on evaluating and understanding your credit score, visit www.myfico.com.