There are three major credit bureaus, and each has its own scoring system based on credit histories. The data they examine include payment history; outstanding debt; credit report history; inquiries; new credit account openings; types of credit in use, such as the number of bank cards, travel and entertainment cards, and department store cards, and personal finance company references.

Equifax uses the Beacon score, Transunion uses the Empirica score and Experian (formerly TRW) uses the Fair Isaac/FICO score.

• Credit scores range from a low of 350 to a high of 850.

• The average American with no late payments has a credit score of 720.

• Low-interest-rate banks want a score of at least 640

• Middle- to high-interest banks want a score of 540 or higher

So what's the big deal over a credit rating?

According to www.bankrate.com, your credit score will determine whether you get credit at all, and the interest rate on that credit. In effect, the better the score, the lower the interest rate, and that can save you a ton of money.

For example: The difference in the interest rates offered to a person with a FICO score of 520 and a person with a 720 score is 3.45 percentage points, according to Fair Isaac's Web site. On a $100,000, 30-year mortgage, that difference would cost more than $85,000 extra in interest charges, according to Bankrate.com's mortgage calculator. The difference in the monthly payment alone would be about $235.

Creditors who refuse credit, and employers who refuse employment based on a credit report, must state in writing the information that caused the negative decision. You are then entitled to a free copy of your credit report and are permitted to challenge any information in the report that you regard as inaccurate.

Tim Pennington