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Check your credit score! Don't miss a payment, or it will ruin your credit score! When it comes to personal finances, having a good credit score is important. What is this magical number that affects a lot of your financial transactions?

A credit score is a rating of your credit risk. You may have heard this referred to as a FICO score, because FICO is the company behind a commonly used credit scoring system. However, many other types of credit scores exist.

FICO credit scores come from each of the three credit bureaus, Experian, TransUnion and Equifax. The credit bureau compiles data on your financial behavior and gives you a score on a scale of 300 to 850 to determine how risky it would be to lend you money. The higher your score, the more lenders believe you're apt to repay your loans. People with higher credit scores benefit by being able to get more credit, and they can get significantly better interest rates on loans.

FICO credit scores come from assessing your level of risk in five categories on your credit report:

• Credit history. How good are you at paying off your balances? This looks at all of your credit accounts--including credit cards, retail accounts, installment loans, finance company accounts, and mortgages--to see how timely you make payments. If you're delinquent on any accounts, the score takes into account how late your payments were, how often you had late payments, if you've still got a past due balance and if your account is in collection. If you've declared bankruptcy or have other adverse items of public note on your record, such as a lien or lawsuit against you, this will also show up on your credit report.

• Indebtedness. How much do you owe? This category analyzes whether or not you have outstanding balances and how much you still owe on your different accounts. The number of accounts you have with balances is also taken into consideration.

• Length of history. How long have you had credit? This category analyzes both how long you've had accounts open and how long it's been since you used them.

• Pursuit of credit. Have you looked for or opened a lot of accounts recently? Here, the number of credit applications and accounts you've recently pursued is figured into the score. This category also reflects any work you've done to regain a positive credit history if you've had problems keeping current with payments.

• Variety of credit. What types of credit do you have? This tabulates the different categories of credit you have, such as credit cards, auto loans, home mortgages and student loans, among other types.

Because there are five categories, if you have some issues in one of them, it's not "going to destroy you," says John Ulzheimer, president of Consumer Education at SmartCredit.com. "It's a multivariant system. No one item draws your score. It's based on the blending. You may not do well in one category, but if you do well in other categories you'll have compensated for it."

Ulzheimer says that your credit payment history and your level of indebtedness are the two most important aspects of your score. Together, the two of these categories count toward two-thirds of your overall credit score. The remaining three categories count toward one-third of the point total.

To find out your credit score, you can purchase it directly from FICO. Alternatively, a lender, such as a mortgage lender, may be willing to share your score with you when you apply for a loan.

If your score isn't as high as you'd hoped, or if some recent credit problems hurt your score, it is possible to improve that number. "It's hard to get stuff off your credit report, especially if it's accurate," says Ulzheimer, referring to negative issues like bankruptcies or delinquencies.

"The most actionable thing you can do is reduce or get out of credit card debt." As you make payments on your credit cards and outstanding loans, your credit report changes within the next 30 to reflect the payments. It's possible to see a lot of change "especially if you're reducing your bill by a lot," says Ulzheimer.

Ulzheimer also advises to check your credit report for inaccuracies. If you discover a negative event on your credit report that's completely wrong, getting it removed can help.

This is also true in terms of late payments. If you are typically someone who pays bills on time but accidentally makes a late payment for an unusual reason, you might be able to work with the issuer of that loan or credit card to not have that on your record. "Credit reporting is voluntary," says Ulzheimer. "There's nothing that says a lender has to report this. Some issuers and lenders will cut you some slack."

Talking directly to your lender—and not to the credit bureau or FICO—is the best way to obtain what Ulzheimer calls a "good will deletion."

That's not to say that you should take advantage of a lender's good will. "Treat that due date like a due date, and not a suggestion," says Ulzheimer, noting that the issuer may still charge you a late fee, but they may also help you out by choosing not to report that late payment to the credit bureaus. Still, Ulzheimer advises it's not good to get into the habit of making late payments on your loans and outstanding credit card balances. "You can't miss payments and expect a fantastic credit score."