A credit score is a number that helps lenders determine who is a good credit risk and who is not. It is a reliable predictor of how likely a person is to pay back their debt on time and in full.

There are two types of credit scores – custom and generic. A custom score is one developed by an individual lender and based on credit reports and a borrower’s specific account history with the company. A generic credit score is a number that indicates how likely a borrower is to honor the loan terms and pay the lender back on time. The most commonly used scoring system is a generic system called FICO.

Credit scoring is considered a reliable method of determining who is a good credit risk. Before it was developed, lenders had to physically review each applicant’s report and make their decision in a very subjective way. The process was slow and time consuming and decisions were often based on a lender’s personal opinion as much as the candidate’s ability to repay a loan.

Today, most lenders rely on the FICO score – a statistical scoring system developed in the 1950s and put into wide use in the 1980s. FICO assigns value to different variables including total debt, types of accounts, the number of late payments and the age of accounts. Those variables are then combined to create a credit score ranging from 300 to 850. A person with a score of 700 or more is considered a good credit risk.

If you don’t know your credit score, it is a good idea to find out. Simply contact one of the three major credit bureaus (Equifax, Experian and Transunion) and request a copy. The cost is about $9 per report, although prices differ from state to state.

If you recently applied for a loan and were turned down, you are entitled to a free copy of your credit report. Write the credit bureau within 30 days of the rejection and include a copy of the declined loan application.

You can also get a free report if you are unemployed and planning to apply for jobs in the next 60 days; receiving public welfare assistance; or believe the credit file contains mistakes resulting from fraud.

To order a copy of your credit report, order online or call one or all of the three credit bureaus and follow their directions. You will need your full name, date of birth, current and former address, Social Security number, your spouse's name and your phone number.