Your credit score is determined by 5 main categories:

1. Payment History (35%)

2. Amount Owed (30%)

3. Length of Credit History (15%)

4. New Credit (10%)

5. Types of credit used (10%)

How is the FICO 08 scoring system different?

FICO 08 will eliminate the impact of authorized credit card users. In other words, when scoring a consumer, the new system will no longer take into consideration credit card accounts for which that person is an authorized user. Authorized users are normally spouses or children of primary card holders who do not have credit card accounts of their own and are trying to build their credit histories. This change is made in order to stop some people with bad credit from undermining the system by becoming authorized users of a friend or a total stranger with a good credit history. However, it will certainly hurt those spouses and children of card-holders who legitimately used the practice to build their own credit.

Scores will still be calculated from the five factors above as the old version, but FICO will go easier on people who make the occasional slip. For example, if a borrower makes a late payment on one account but pays on time on several other accounts, his/her FICO score won't drop too much. On the other hand, FICO will come down harder on those with multiple delinquent accounts.

FICO 08 will give more points to consumers who maintain a variety of credit types, for it proves that they can manage payments on various kinds of loans. As for those who use a high percentage of their available credit, however, the new scoring system will penalize them more severely.

1. Pay your bills on time.

2. Do not open a lot of new accounts during a short period of time. It makes lenders very queasy.

3. Do not open a lot of store credit cards just to get the initial 10% discount. Open only credit cards that you think you will actually use.

4. Transferring balances too often actually lowers your credit score, so just try to pay them off instead of moving them around.

5. Try to use your credit cards less. And, if possible, pay them off every month. The bigger the space between your total credit limit and the balance you carry, the better.

6. Do not close your old paid-off accounts. By closing them, you shorten your credit report, which somehow makes you seem less creditworthy to the lenders. Craig Watts, an executive at Fair Isaac & Co., once said "Closing accounts can never help your score, and often it can hurt."

7. If you have made a late payment, try to contact the lender and ask them to remove this information from your records in a "goodwill adjustment." They may say no, but it's absolutely worth a try.

8. Before opening a new account, ALWAYS read the fine print. The heart of the credit card transaction is in the FINE PRINT. Don't fall for a teaser or promotional rate. Most teasers have time limits. After the introductory period ends, the "real" APR is usually very high. So, if you are already struggling and trying to make ends meet, choose a credit card that works best for you in the long run.

9. If you have so much debt and are in danger of bankruptcy, consider working with a non-profit agency such as Consumer Credit Counseling agency; they can help you negotiate lower payments and interest rates, which enable you to completely pay off your debt within an average of three to five years.