Credit card companies, as well as a variety of businesses and other financial institutions, utilize a credit score to rate individuals.

Essentially, your credit score communicates how safe/reliable you are as an investment: how likely you are to pay back money you’ve borrowed.

Your credit score plays a big role in situations such as the interest rate you are offered on a mortgage or car loan, whether you can get a cell phone contract, whether a landlord will rent you an apartment, and the premium on your car insurance. A bad score is a red warning flag for businesses. They might still be willing to make a deal with you, but your ability to pay your bills on time might be in question so you’ll be charged higher interest rates.

These higher rates are their insurance policy in case you do indeed turn out to be a lousy credit risk. There are a handful of companies that compute credit scores, but most knowledgeable financial advisors recommend ascertaining your FICO Score. This is computed by Fair Isaac & Co. One FICO score costs $14.95. Other businesses offer cheaper credit scores, but FICO is to the other guys like the Red Sox are to the Vermont Expos.

Businesses trust FICO and use its scores when checking up on your financial health. Just because your credit score from another business looks fine, doesn’t necessarily mean your FICO score is in good shape. Go to www.myfico.com to get your FICO credit score.

FICO scores are based on financial information tracked by three major credit bureaus: Equifax, Experian, and TransUnion. The credit bureaus know how many credit cards you have, whether you pay your bills on time, and all the details on any loans you might have, such as mortgages and student loans.

A new federal regulation entitles everyone to a free credit report once a