I'm 20yrs old and I have a credit Score of 726?

To really understand the credit scoring system and how healthy your own score is, it is actually important to know some other information as well:

1. A FICO score can range from 300 to 850.

2. The national AVERAGE FICO is 678.

3. The MEDIAN American FICO score, however, is higher at 723.

Even middle school math made my eyes glaze over, so if you are anything like me it may help to have a refresher on the difference between "median" and "average" at this point.

"Median" means that half of all credit scores fall below 723 and half of all credit scores fall above 723.

However the "average" score is what you get if you add together every credit score in America, and then divide that total by the number of scores that were added.

Why is the median score of 723 higher than the average score of 678? The reason is because there are more really low scores between 300 and 723, than there are really high scores between 723 and 850. In fact, 60% of scores are between 650 and 799. Of the remaining 40% of scores, more are below 650 than are above 799.

4. Anything below 620 - 650 is considered a poor score. And remember - the lower you score, the higher the interest you are charged, assuming you can get credit in the first place.

5. There is nothing wrong with having a median score of 723. This is a good credit score and lenders will perceive you as unlikely to default and offer you a competitve interest rate.

6. A score of 770 and up is considered excellent and people with these scores get the very best deals. However, the advantage between having a score of 800 versus 700 is minor compared to the difference between having a score of 700 versus 600.

7. At below 550 you would be considered to have damaged credit and be in need of credit repair.

In short, aim to hit the gold standard of 770 instead of the median national FICO score of 723, but don't sweat it. The median score is still definitely good credit and enough for you to qualify for standard rates.

To raise your score you need to understand how scores are calculated.

There are five areas that go to make up your score, and they are weighted differently - some areas are more important than others and have a bigger effect on hurting or improving your FICO score:

1. Payment History = 35%

2. Amounts Owed = 30%

3. Length of Credit History = 15%

4. New Credit = 10%

5. Types of Credit Used = 10%

So, the 10 best things you can do for raising credit scores are:

KEEPING A CLEAN PAYMENT HISTORY

1. Pay on time. At 35%, payment history is the largest area of concern to lenders. The only thing that will damage your score more than late payment is total non-payment.

2. Did I mention pay on time?

AMOUNT OWED - NOT TOO MUCH (BUT NOT TOO LITTLE)

3. Ideally keep your debt to credit ratio to 30% or less. This means only using 30% of your available credit per card.For example, if you have a card with a credit limit of $1,000, keep the balance at $300 or less.

4. This holds true per individual card but also for your debt to credit ratio overall. This means you need to pay down debt - not just move debt around. This is a frequently misunderstood aspect of how to raise credit scores. You will save money by doing the 0% APR balance transfer dance, but you will not improve your FICO score.

LENGTH OF CREDIT HISTORY

5. A longer average account age will boost your score. This means that opening new accounts can lower your score because a new account will bring down the average age.

6. Point 5 above has a rider - if you have poor credit you need to re-establish your credit and rebuild your credit. This means taking a hit in the short term by applying for as much new credit as you can get so that in the long term your score will improve.

NEW CREDIT DOs AND DON'Ts

7. Don't constantly apply for new credit. If you are shopping around for credit, try to squeeze the applications into a short time frame. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you are just starting out building your credit, a lot of inquiries will lower your score more than someone with a longer history.

8. Do request a copy of yor credit report regularly. Requesting a copy of your own credit report does NOT damage your credit score. This is an Internet myth. Requesting your own credit report or credit score from an authorized provider does not set off alarm bells the way that multiple requests sometimes does.

TYPES OF CREDIT USED

9. Mix it up. A combination of revolving credit such as credit cards and installment payments like a car loan is ideal.

10. Avoid store cards such as Target, Home Depot and so on. These count as lines of credit as opposed to revolving credit like regular credit cards. Store cards are not given much respect by credit scorers. In the long run, the convenience or in-store discounts will not make up for being refused a VISA card or a prime mortgage rate later on down the track.