Credit score numbers can be confusing because few people actually know what the ratings mean. When you're told you have a good rating, is that the best? Where do the numbers come from? These are important questions that can help improve your financial well being, and best of all, can save you money.

The rating you are given is calculated based on the information in your credit report. Important factors include the ratio of the credit you are using to the credit available to you, so if you pay down your card balances it will have a positive affect on your report, and thus, your score. Other factors include the age of your accounts, unpaid debt and late payments. Having a varied history using different types of accounts (for instance both cards and loans) and on time payments will help build up a healthy rating.

Companies that ask to check your financial history will send away for your information and be sent your credit score numbers. Many different companies will ask for this, for example, rental applications, employment applications, lenders, and insurance companies. Each company decides what this means to them. They will use it to help them decide whether to accept your application, and then what interest rate to offer you. This means that with a lower rating you'll be offered lower interest rates, and save money.

While there are not official terms used to reference ranges of numbers, you will typically hear people refer to scores as bad, acceptable, good, and excellent.

Bad ratings will have a hard time getting accepted for a lot of things, and will be offered the highest interest rates. Acceptable scores will generally find they are accepted for things, but will still have high rates. Good scores will generally always be accepted, even for big things like mortgages, and may even be offered the best interest rates on some things, but not everything. Excellent ratings can do anything, and will always be offered the best rates.

With an excellent rating you will also get a lot more flexibility out of companies, for example, if you are looking for a specific condition on a loan like a longer repayment period you'll have an easier time finding a lender to work with you on this.

As you have seen credit score numbers can have a large impact on your finances and are worth paying attention to.