For an economy to function smoothly, there has to be a consistent influx of liquidity, which is infused by financial institutions. If it weren't for open credit lines made available by banks, most of the businesses we see prospering today, may never have taken off. The recent economic recession has taught us the perils that careless use of credit lines can land people in. In this era of multinational corporations going bankrupt, banks are more careful in analyzing loan applications and one of the details which they pay close attention to, is the credit score. About Credit Score Ratings Banks, credit unions and other finance institutions need an objective criteria for analyzing the creditworthiness of any person, who is applying for a line of credit. That's what the provision of a credit score accomplishes in USA.

FICO Credit Score	Description
730 - 850	Excellent
700 - 729	Great
670 - 699	Good
585 - 669	Average
300 - 584	Bad

Experian, Equifax and Transunion are the credit bureaus responsible for the assimilation of financial and credit usage related data of all individuals in USA and the calculation of credit scores, based on that data. They all use the FICO algorithm for calculating these scores, which takes many variables like credit history, outstanding debts and past credit usage into consideration. You can get your FICO scores from any of these bureaus. When you apply for loans, the finance institutions scan your credit report and rating to determine your ability to repay them. The credit rating scale maximum and minimum stretches from 850 to 300. While the highest score possible may be totally unattainable, anything in its vicinity is considered to be an excellent score. Depending on the credit usage history, your score could be anywhere in the range presented below. Determinants To maintain a good credit score, you need to understand the determining factors which decide its value. Knowledge of these factors will help you understand how your day-to-day financial transactions can impact your creditworthiness. Here are the factors which directly affect your rating. The financial data which the FICO algorithm uses to calculate your credit score, is derived from credit reports. Let us see how scores are perceived by financial institutions. Credit Score Scale Before applying for a loan, it's essential that one refers to the scale presented above, as it will give you an idea about the odds stacked against your loan application's safe passage. If you fall in the bad credit score range, be ready for a tough negotiation session with the bankers. If you find yourself in the average or good category,you can be a bit more hopeful. Falling in the excellent score category, will put you in the league of people who are considered most favorably, when applying for loans with banks. Credit score is not the only factor upon which, banks base their decision. They will consider your current financial position, present earning capacity, the collateral you are willing to offer and the potential of your business endeavor if any, before they make a decision. It's not that individuals with bad score won't be able to get loans, but the terms and conditions, including interest rates charged, could be more harsh than normal. In case of a bad rating, a bank may also demand collateral. On the other hand, if you have less baggage in the form of past bad financial karma, you may actually end up with a good score, which will make your life easier, when applying for loans. An excellent score will see to it that finance institutions open their doors wide open for you! Look at the chart presented above and see where you stand right now and decide where you would want to be in a year's time. Create a financial management plan which will help you improve credit scores to higher levels in the future.