A FICO score is a number between 300 and 850 that reflects your credit history. To get the best credit terms, a score of above 700 is optimum; however, any score above 600 is considered acceptable. A score of 500 or below is considered unacceptable, and individuals with scores in this range may be unable to get credit or can expect to pay exorbitant interest rates.
Your credit score is determined by your use of credit cards, loans, and other forms of credit. It also takes into account your access to credit cards and your debt to income ratio. Each time you borrow money, the transaction and the resulting payments and interactions with the credit card company are reported to one (or more) credit bureaus. They keep a record of your credit history, and assign you a FICO score.
Thirty-five percent of your FICO score is based on your history of paying credit (including credit cards) responsibly and avoiding bankruptcy and judgments. Thirty percent of your FICO score is based on how much you owe, and how close you are to your balance. Fifteen percent is based on the length of your credit history (longer is better). Ten percent is based on the amount of new credit you apply for (again, less is better). And 10% is based on the different types of credit you use (if you just have unsecured debt, your score will be lower than if you have a mix of secured and unsecured debt).
