If you don’t know what a credit score is, you have plenty of company. The nation’s leading credit bureaus,

Everyone who applies for credit is routinely assigned a score ranging from 300 to 850 — the higher the better. It is designed to help lenders determine how good a risk you are, although most lenders take other considerations, such as income, into account as well.

The principal credit bureaus — Equifax, Experian and Trans Union — calculate the scores, based on what they have learned about your credit history, and pass them along to lenders when you apply for a loan.

By far the most widely used rating is the FICO score — so named because it is derived from a highly regarded statistical model devised by software developer Fair, Isaac & Co., of San Rafael.

Equifax, Experian and Trans Union all sell FICO scores to lenders. But the scores may differ slightly from one credit bureau to the next, because each bureau is apt to have slightly different information in its database.

Until now, consumers couldn’t see their credit scores unless their lender allowed them a peek. And even then it was rarely made clear to the consumer exactly what criteria went into the calculation of the score.

All that is about to change.

A new law in California says the veil must be removed from credit scores no later than July 1.

Residents there will not only be able to see their credit score, but, will also find out the main reasons it is as high or as low as it is. The score provides vital clues about improving your credit standing.

It may, however, take time to clean up your credit record. If a bill you incurred was ever sent to a collection agency, for example, that fact will remain on your record — and hold down your score — for seven years, even if you never let that sort of thing happen again.

Although only California requires score disclosures, the credit bureaus have decided to make scores available to consumers throughout the United States. They claim they had been planning to go public with credit scores even before California took the initiative.

“It’s been a matter of evolution,” says Mike Cummins, vice president and head of consumer direct business at Equifax.

Equifax (www.equifax.com), Experian (www.experian.com) and Trans Union (www.transunion.com) all will make credit scores and explanations of the scores available on the Internet. All will charge a modest fee for this service every time you request a score, although none has yet specified how much.

Although the FICO score is by far the most commonly used, only Equifax plans to disclose FICO scores to consumers.

Experian and Trans Union, though they routinely provide FICO scores to lenders, will only release scores based on models they devised themselves. Unlike Equifax, they have not yet reached an agreement with Fair, Isaac that would allow them to release the FICO numbers to consumers.

Experian spokesman Don Girard and Trans Union spokesman Clark Walter say the scores their companies will disclose are used by some lenders, and that they accurately reflect an individual’s credit standing.

If you want the real McCoy — the FICO score — you will be able to get it at either www.myfico.com, a site being developed by Fair, Isaac, or www.equifax.com.

In a package deal, you will get not only the FICO score, but also your most recent Equifax credit report — something that has been readily available to consumers for years. You will pay for the service online, using a credit card number.

Equifax and Fair, Isaac will provide both your credit score and an explanation. About two dozen variables are fed into the FICO statistical model, but the explanation will focus on the four that had the greatest impact on your score, and include tips on how to improve your score.

“It might say your average outstanding credit card balances are too high, or you have too many credit cards, or you are late on your payments too often, “ says Cummins of Equifax.

Consumer advocates and other critics have pointed out that credit scoring is not an exact science, that it is full of paradoxes and anomalies that can prove unfair to some consumers.

“One of the best things about making this information public is that the model builders will have to think about whether their model will appear fair to the public,” says Gail Hillebrand, a lawyer with the Consumers Union in San Francisco.

For example, if you have no debt outstanding, that can be worse for your credit standing than if you have a small amount of debt, because the bureaus can’t get a good handle on you.

Closing an old credit card account can hurt you, because it shortens your credit history. And consolidating credit card accounts, often suggested by financial planners so you can more easily monitor your debt load, could be bad for your score, because it causes your total debt to become a greater percentage of your available credit.

Cummins acknowledges that there are hitches, but he says that overall, credit scores have proven to be “very good predictors” of creditor performance.
He also points out that savvy lenders will take other considerations into account, such as a customer’s income and position in the community.