How to measure financial success

Measurement 5.

Credit score

The three major credit reporting agencies – Experian, TransUnion and Equifax – collect all sorts of data about your borrowing and bill-paying habits.

The information from those credit reports is then used in complex and secret formulas to generate your credit score, which is supposedly a measure of your creditworthiness.

The oldest and most widely used formula was created by Fair Isaac Inc. and results in what's known as the FICO credit score. FICO scores range from 620 to 850, with the current median score right at 723.

You can obtain free copies of your credit reports at annualcreditreport.com. You absolutely want to take advantage of this to check for mistakes – and errors are depressingly common.

But to get your FICO credit score you must go to the FICO website and pay $20 for each score generated from each credit report.

A cheaper option is to use FICO's free credit score estimator.