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Understanding what goes into a credit score and how to raise it is extremely important in this day and age. For one, there’s almost nothing that can be bought on an extended payment plan without a credit report — and its score — being pulled by a potential lender. And keep in mind that a “low” score (anywhere from less than 600 out of 850) means higher interest rates, at the least.

What’s generically referred to as a “score” is usually the numerical index assigned to a person’s credit history by one of several organizations, with the most-common being the FICO (“Fair Isaac Credit Organization”) score. Each of the three major credit reporting bureaus (TransUnion, Experian, Equifax) have their own internal scores, but FICO is considered the industry standard.

Never forget that a “low” score (usually, 600 or below is considered a low score nowadays, though some bureaus now consider 650 to be low) can end up costing a person looking for consumer credit or a home or auto loan a great deal in terms of it being more expensive to borrow that money. And employers are beginning to look increasingly at a score and credit history in terms of hiring decisions.

Perhaps the biggest reason is that employers are coming to believe that a person’s creditworthiness as measured by a score can be a reflection of a person’s overall work ethic and trustworthiness. Many human resources experts dispute this, and the law is clear that an employer must obtain permission from the possible employee in order to pull a credit report and score.

Also, it’s becoming more difficult to obtain a mortgage these days with a low score. In fact, those with such scores might not be able to get a loan at all without a significant down payment. And even auto insurers are getting in on the act and are pulling credit reports before extending indemnity coverage, though more than a few states are starting to outlaw that practice.

The things to do to raise a credit score are fairly common sense and revolve around paying things on time. FICO has recently released information that allows people to see how it goes about formulating a score and it confirms the need to avoid bankruptcy or home foreclosure if at all possible. Both those actions can lower scores by about 200 points. A late credit card payment can drop a score 10 points, at minimum.

Lastly, having credit cards that are near their limit or are maxed out can cause anywhere from a 10 to 50-point drop in the consumer’s credit score. The answer to how to raise a score, then, should be obvious; pay bills on time (and pay a bit more than the minimum) and keep amounts owed to reasonable levels. In the end, watching over a score is an individual responsibility, so take it seriously.

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