A credit score is the quantifiable end result of an assessment of your credit history and credit report using a complicated formula to forecast risk for creditors and lenders. Lenders use credit scores to makes decisions on the interest rates on your credit instruments or loans, issuance of loans or credit cards, and increasing credit limits on current accounts.

Additionally, insurance companies employ credit scores to aid them in issuance of new insurance policies, deciding the policy’s premium rate, and further renewal of any existing policies. Your potential employer may use your credit history to help them make a hiring decision.

Since, credit scores affect almost every component of people’s lives, it is good practice to improve or maintain personal credit scores. Even people with good credit are pushing the envelope to improve their scores.

Generally, the credit score is known as the FICO score. The FICO range is between 300 and 850. Just over a year ago, a score from 680 to 720 would have qualified you to get the best interest rates on loans; the bar has now been raised to above 720. A score above 720 is considered excellent with the median FICO score in the U.S. being 723.

The fundamental steps in building and maintaining a good credit score are easy; the difficult part is maintaining fiscal discipline. Here are some important steps you can take in the credit score game:

Pay your bills on time, avoid late payments. Don’t max out your available credit. Don’t cancel old cards, simply stop using them. Note your credit card limit Review your credit report and dispute any errors with the three credit bureaus: Experian, Equifax, and TransUnion.

Some strategies to improve your credit rating can backfire, such as applying for a new credit card, hoping to raise your available credit, in turn hoping to boost your FICO score. There are many consumers that reach a point in their financial life that they seek outside help like, credit counseling, debt consolidation, credit repair and credit consolidation services. You want to avoid getting to the stage where you will need the help of these services; the only way to do it is to imbibe fiscal discipline and pay off your debts.