If you’re trying to get a loan, a mortgage, or even a credit card, you need to know your FICO score. That number can mean the difference between yes and no… and even factor into how much interest you get charged. Higher interest rates make it harder to pay down debt – because more of your payment goes toward interest instead of principle (the original amount you borrowed), so you always want to score the lowest rate possible.

To lenders, your FICO score is a key measure of how likely you are to pay your debts on time. Lenders – including credit card companies and banks – look at this score, along with other details of your financial history to figure out whether or not they’re going to let you borrow money, and how much interest they’ll charge for it.

The possible score here ranges from 300 to 850 – anything over 650 counts as a good credit score. But having a score even a little below that 650 mark can make it very hard to get good rates on your loans, making it that much harder to pay them back.

To come up with your score, FICO looks at five factors, and the first two count the most:

  1. Payment history (whether you pay your bills on time)
  2. How much debt you have right now (compared to your total credit limit)
  3. What types of credit you’ve used (the mix of credit cards and installment loans like car loans and mortgages)
  4. New credit accounts (especially whether you’ve recently opened a lot of new accounts)
  5. How long your credit history is (from your very first credit card or loan)

Like your credit report, your FICO changes over time based on how you handle credit. The best way to improve your score is to work on paying down your credit card debt, and making at least the minimum payments every month, on time.

FICO stands for Fair Isaac Corporation, one of the first companies to figure out how to calculate credit scores.