Anyone who uses credit ought to know what a credit score is. And surveys show that most people do.
But many still don't know what information is used to determine their credit scores, according to a survey by the Consumer Federation of America and Fair Isaac Corp., developer of the FICO credit score used by most lenders to evaluate consumers looking for credit.
If I were to tell you that as your income goes up, your credit score will increase, would you agree?
If you answered yes, you need to do some credit score basic training.
Almost one-half of consumers questioned in the CFA and Fair Isaac survey didn't know that increasing one's income will not increase one's credit score.
Credit scores reflect only past credit history and not income, marital status, occupation, or other personal characteristics.
''Despite all of the news coverage about credit scores over the past year, many consumers still do not understand important facts about these increasingly influential numbers," said Stephen Brobeck, CFA's executive director.
How would you answer this question: True or false, a married couple has a combined credit score?
It's false. You might be able to marry for money, but you can't marry your way into a good credit score. Debt that is jointly owed can affect your credit score as an individual. However, couples don't have a combined credit score.
To help consumers learn more about credit scoring, CFA and Fair Isaac have produced a brochure being distributed at no cost by the federal government's Federal Citizen Information Center.
To get a copy of ''Your Credit Scores," contact the center at 888-878-3256 or write to: Credit Scores, Pueblo, Colo., 81009.
The brochure is also available online at www.pueblo.gsa.gov. Click on the link for ''Your Credit Scores Publication."
So what is it you don't know that you should know about credit scoring? Here are some basic facts:
FICO credit scores range from 300 to 850. A score above 700 indicates you are a relatively low credit risk and will likely qualify for the best interest rates. Consumers with scores below 600 are typically charged higher loan rates. A low credit score can cost you not only thousands of dollars a year in additional finance charges, but you might also be denied insurance, telephone service, an apartment, or even a job.
You don't have just one credit score. Each of the three major credit bureaus -- Equifax, TransUnion, and Experian -- generates a credit score on you. That means you could have three different credit scores because your credit history at each bureau may be different.
Not all lenders use all three credit scores. Some may grant you credit or approve your auto loan based on a single bureau's score or all three. Mortgage lenders typically consider all three credit scores. In the case of a home loan, lenders often use the score that falls in the middle (not an average of the three).
The two most important factors in determining your credit score are your payment history and how much you owe.
The fastest way to raise your credit score is to pay bills promptly and keep your credit card balances low. Want a better score? Then pay off debt rather than moving it from one credit card to another.
Features in the brochure I find useful are the hypothetical examples of how certain credit usage can change credit scores for the better or worse over time.
In one example, a woman starts out with a credit score of 780. However, she divorces and her ex-husband agrees to make the payments on two joint credit cards.
The ex then nearly maxes out the cards and fails to make payments on time. As a result, the woman's credit score drops 180 points to 600.
When the woman gets her former husband to roll over the balances on both cards to a new card that he opens in his name only, paying off the two accounts improves her score by 80 points (in just one month).
Even if you think you know it all, get this brochure. Because when it comes to your credit score, knowledge isn't just power, it can amount to real cost savings.
Michelle Singletary is a columnist for The Washington Post.
