Your credit score is your financial report card with a three-digit number between 300 and 850. Judging by this number, lenders decide whether to trust you with money. The higher your score, the better deals you get on loans, credit cards, and even apartment rentals. If your score is around 760–850, it can literally save you thousands of dollars over your lifetime by qualifying you for lower interest rates. What influences this score?

First, it is calculated by a company called Fair Isaac Corporation (FICO) using data collected by three agencies (Equifax, Experian, and TransUnion) that track your borrowing and repayment habits. Ultimately, five things determine your score. The biggest one is whether you pay your bills on time. It accounts for 35% of your score. Remember that even paying just the minimum on time is better than missing a payment.

Next up, at 30%, is how much of your available credit you’re actually using. For example, if your credit card limit is $10,000 and you owe $9,000, that looks bad. Thus, try to keep balances low, and consider asking your card issuer to raise your limit without actually spending more. The age of your accounts matters too and constitutes 15% of your FICO score. Older accounts show a longer track record of reliability. The remaining 20% comes from how often you apply for new credit and whether you have a healthy mix of different credit types (cards, loans, etc.).

Knowing what influences your credit score, you can keep it high in a few ways. To stay on top of your score, get your free credit reports once a year at annualcreditreport.com and check carefully for mistakes. For your exact FICO score, you can purchase a report through myfico.com.

If you’re seeking a car or home loan, rate-shop within a fortnight to avoid multiple inquiries hitting your credit score. Before applying for any major loan, pay down your credit card balances as much as possible. Moreover, always pay student loans on time, since defaulting on them is nearly impossible to undo, even through bankruptcy. Parents with strong credit can give their children a head start by adding them as authorized users to an existing account.