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A credit score is a three-digit number, usually on a scale of 300-850, that lenders and credit card issuers use to help them decide whether to approve your credit application. The higher your score, the better your chances.

Borrowers with scores above 760 have a better chance at qualifying for credit cards and loans and getting the best interest rates. Good credit also can save you money.

You may qualify for better cell phone deals, pay smaller (or no) utility deposits and pay less for insurance, for example. And some employers and landlords consider credit as well.

When you or a lender "check your credit," a scoring model from either FICO® or VantageScore® is applied to the current data in one of your credit reports.

Your score will vary, depending on which scoring model was used and whether it looked at your credit report from Experian®, Equifax® or TransUnion®.

Your credit reports are a record of how you’ve used credit in the past.

Credit scores interpret the information in your credit reports to estimate the likelihood that you will repay borrowed money.

There are two companies that dominate credit scoring, FICO and VantageScore. Both use a credit score range of 300 to 850, but they have different ranges and call those ranges by different names. NerdWallet gives you a VantageScore, so we'll focus on those ranges. Here are some general guidelines:

Superprime: Any score in the high 700s or above. FICO would call this range exceptional.

Prime: Any score from the mid-600s to mid-700s. FICO would call this range very good or good.

Near Prime: Any score in the mid-500s to low 600s. FICO would call this range fair.

Subprime: Any score between 300 to high 500s. FICO would call this range very poor.

Your credit score is determined by several factors, listed in the order of importance:

Payment history: Your record of on-time payments and any negative marks, such as missed payments, accounts sent to collections or bankruptcies.

Credit utilization: Balances you owe and how much of your available credit you're using.

Age of credit history: How long you've been using credit.

Applications: How frequently you've applied for credit recently.

Type of credit: How many and what kinds of credit accounts you have, such as credit cards, installment debt (such as mortgage and car loans) or a mix.

A credit score does not consider your income, savings or job security. That’s why, in addition to your credit score, lenders also may check what you owe, how much you earn and assets you have.

To build your credit score, follow these tips:

• Pay all your bills on time, not just your credit cards. Late payments and accounts charged off or sent to collections will hurt your score.

• Use no more than 30% of your credit limit on any card — less, if possible. The best scores go to people using 10% or less of their credit limits.

• Keep accounts open and active when possible. Older accounts establish your credit history and payment record and can help your "credit utilization," or how much of your limits you're using.

• Avoid opening too many new accounts at once. New accounts lower your average account age and each application causes a small ding to your score. We recommend spacing credit applications about six months apart. Make sure you conduct thorough research on the best credit card for your needs before applying.

• Check your credit reports and dispute errors.

If you're just starting out or haven't used credit in at least six months, you might not have a score. Don't worry, NerdWallet has a guide to help you get started with building credit.

Paying late can hurt your credit score, as can having a credit card balance that’s 30% or more of the credit limit.

It takes longer to recover from a late payment, which can stay on your credit reports for up to seven years. But the damage from a high balance disappears after you’ve brought the balance down.