Your credit worth, as defined by financial industry, is overall picture of your financial health that is used by lenders to determine your ability to repay debt. By looking at a combination of factors, lenders, such as banks, credit card companies, and utility companies, estimate how worthy you are of receiving a line of credit or regular services based on a payment schedule.

The most common factor used by lenders to determine credit worthiness is your credit score. Your credit score is a number generated by a mathematical formula that estimates how likely you are to pay your bills. Based on information in your credit reports from three credit bureaus, Equifax, Experian, and TransUnion, your credit score is a factor affecting your ability to get loans and good interest rates. Lenders compare your credit report with millions of others to determine your score.

But your credit score is not only thing that lenders look at to decide whether or not to give you a loan or a good interest rate. They also evaluate individual entries on your credit report and information you provide on your loan application. Some creditors consider your occupation, length of employment, and whether or not you own a home.

Each creditor creates a credit scoring system based on factors important to that institution, so you may receive different results with different lenders. For this reason, it is also important to talk to credit manager about why you received credit limit and interest rates that you did. You may have mitigating circumstances that affect how your credit history is viewed, or you may be on margin between two score categories. Negotiation may be possible if you are open with creditor about your ability to pay.

If you are turned down for credit, law states that you are entitled to a free credit report if you request it within 60 days. A few steps you can take to improve your credit worthiness include paying your bills on time, paying down your existing debt, and refrain from taking on new debt. But points awarded by creditors for each factor varies, and an increase in your credit score depends on how one factor relates to another factor in their particular scoring model.

Collections, bankruptcies, and late payments have greatest negative effect on your credit score, and, therefore, on your credit worthiness. Paying your bills on time may seem like a small thing when you’re writing that monthly check, but an accumulation of timely payments says a lot to a potential lender looking for a reliable client. Prompt payments in recent months can actually make a big difference in your credit score.