Banks and credit card companies

Banks and credit card companies review your score when deciding whether to extend you credit and how much interest to charge. (See "What bad credit really costs you.")
•A high score can lead to lower car- and home-insurance premiums, a deposit waiver from utility companies and a better service package from the cell-phone company.
(See "5 people who check your credit.")
•Many landlords check credit scores before allowing you to sign a lease. (See "Credit checks: A civil rights issue?")
•Many employers -- 35% in 2003 -- are doing credit checks on prospective employees, particularly those who would deal with money. Employers need your written permission to make the check and must give you a chance to respond.
With so much at stake, it's wise to find out where you stand and take steps to raise your score if it's below 700, particularly before you apply for a mortgage or other loan. Above 760 and you're in the upper echelon. A score below 620 tells people you're not a good risk and destines you for credit denial or subprime interest rates. (See "Raise your credit score to 740.") What is a credit score? The three major credit-reporting agencies -- Equifax, Experian and TransUnion -- use software developed by Fair Isaac Corp. to rate your risk for assuming debt based on your credit history. The result is commonly known as a FICO score. This year a long-delayed update to the scoring formula is rolling out, and there are a few advantages to consumers -- and some serious new risks. Here are three scenarios to help you understand the changes. The score is based on five factors, including payment history, the amounts you owe and the types of credit you've obtained. Personal information like income, occupation, age and marital status are not considered. (See "Credit bureau move creates 'secret' scores.") Video on MSN Money Improving your credit score Trying to increase your credit score? Here are the 3 best ways to improve a credit score, reports Stacy Johnson of Money Talks. The FICO score can range from 300 to 850, although very few reach that pinnacle. Each credit bureau may assign you a different score, based on the information it receives from creditors. (Take our survey to get a free credit score estimate.) You generally have to pay to get your credit score. You are legally entitled to one free credit report each year from each of the three credit reporting agencies. (See "How to get a free credit report.")