Credit scores are a lot like cholesterol levels. We know there’s an ideal number we should strive for, but we don’t always make monitoring it a priority.

For your credit score, the magic number is somewhere around 740. With a score in the mid seven hundreds, you get the best rates on mortgages, credit card offers, other loans and insurance. There are some overachievers who score higher, but these people are very rare. In fact, only one out of every 1,300 people has a score of more than 800. On the flip side, one out of every eight prospective home buyers faces difficulty getting a mortgage because their score falls between 500 and 600.

Here are some things to keep in mind about your credit score.

Review Your Credit Report Annually
Have a good score? Great. If your identity is stolen, your new friend will have no trouble being approved for new credit in your name. Even if you aren’t applying for a loan or buying a home, you should check your credit report annually through one or all of the three major credit bureaus: Experian, TransUnion and Equifax. And if you have children, you should check theirs as well. Some thieves use the Social Security numbers of children to open credit card accounts.

Medical Bills Can Affect Your Score
You never miss a payment and you’ve never maxed out your credit cards. So what happened to your perfect score? This could be the result of a medical bill being mistakenly sent to a collection agency. It could be a simple paperwork error or a dispute with your insurance company, but when a bill is sent to a collection agency it looks like you defaulted on a payment. And your credit score could drop. So watch those medical expenses and make sure you address issues immediately.

Several Things Affect Your Score
It’s hard to monitor your credit score if you don’t  know what factors are used to calculate it.  Here are some factors and there approximate weight.

Payment History – 35% Impact
Paying off debts on time has the greatest positive impact on your credit score.

Outstanding Credit Card Balances – 30% Impact
Ideally, you should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit.

Credit History – 15% Impact
A seasoned borrower will be stronger in this area.

Type of Credit – 10% Impact
A mix of credit is more positive than a concentration of debt from only credit cards.

Inquiries – 10% Impact
Each new credit inquiry can deduct points; however, personal inquires do not impact scores.

The bottom line is that even smart, financially savvy people could benefit from monitoring their score more closely.

 (This article first appeared on AMP's website www.amppob.com.)