Unless you live in the jungles and buy your wares with bugs and tugs, your credit score is very important and something you should pay attention to. Even though most of us know that credit scores affect mortgages, loans, and many other aspects of our lives, few know how it’s calculated. The most common score (there are many) used is the FICO, proprietary to the Fair Isaac Corp. So the basics: your score is from 300-850, is calculated using a proprietary formula, and will kick you ass if you fuck it up.

There are five weighted variables that factor into your score–

Payment history (35%)
Amount(s) owed (30%)
Length of credit history (15%)
Amount/frequency of new credit (10%)
Types of credit (10%)

You read the grimy deets at Fool.com (I suggest you do..it’s pretty damn informative). One thing that I’ve talked about with friends is getting new credit cards and canceling old ones, and how it affects your score. While none of us knew for sure, we always bullshitted or regurgitated something that we’ve heard before. But here’s how it actually works–the basic idea is that the longer you have good credit the more reliable you must be, so they look at your history to calculate current. If you have had a credit card for a long time, and have paid on time, then your score will be higher than having ten credit cards that you don’t always pay. Applying for new cards frequently also lowers your score, as they see it as you having trouble getting credit. Also, the person with one card is probably less risky than one with ten cards, so having one card (and all else being equal) will get you a better score than having ten (in this category at least).

It’s all pretty damn complicated, so just read the damn article so I don’t have to spoon feed you.

How Lenders Keep Score by Fool.com