As a musician, what may be at the forefront of your mind are thoughts about events in the approaching weeks and months, such as any upcoming gigs, rehearsals or special engagements. With all of this it’s easy to get caught up in the day-to-day work of keeping your financial boat afloat. However, there are some small and effortless steps you can take today to ensure success in the future when planning for big purchases like applying for a car loan or home mortgage — and that’s where your “FICO score” comes in.

“FICO” stands for Fair Isaac Corporation. Your FICO score is a three-digit number that can determine many aspects of your financial future. This score gives potential lenders a snapshot view of your financial risk at a particular point in time and is used to establish how much interest you will be paying on your credit cards, your car loans, and your home mortgage. It could even potentially effect your ability to get an apartment.

FICO scores are provided to various lenders by three major credit reporting agencies — Equifax, Experian and TransUnion. Lenders use the FICO scores that are generated by these three credit agencies as their guide for future risk based on your credit report data. In essence, the higher your FICO score, the lower the risk; the lower your FICO score, the greater the risk. For example, if you have a high FICO score (more than 720), you are more likely to receive lower interest rates on credit cards and other types of loans.

FICO scores range from 500 (worst) to 850 (best). Your score is based on three primary things: your individual spending, your ability to pay your bills, and also your overall debt.

In order for the Fair Isaac Corporation to come up with your score, they first sort the data they receive from the credit bureaus into five categories, which have varying degrees of importance.

• Your payment history (like paying your bills on time) is worth 35 percent of your score.
• Amount owed (like your current balance on your credit cards or loans) is worth 30 percent of your score.
• How long have you had credit? When did you first get a credit card? A mortgage? The length of your credit history is worth 15 percent.
• Have you taken out new credit recently? This accounts for 10 percent of your score.
• What is your mix between credit cards and loans? This is worth 10 percent of your score.

So how can you find out what your FICO score is? The first step is to get a credit report from not one, but all three credit bureaus! This is important because all three credit bureaus (Equifax, Experian, and TransUnion) may have different information regarding your financial picture, so you want to make sure that each report is spotless.

By Sept. 1, 2005, the residents of New York and New Jersey will be able to get one free credit report from each of the three credit bureaus a year (currently they cost about $9 per report). You can get your credit reports online at www.AnnualCreditReport.com or you can get them by calling (877) 322-8228.

Once you have your credit reports, check them carefully for any discrepancies — all too often errors are found on these reports. If you should find an error, file a dispute with that bureau — you can either use their Web site or simply call them. It is important to do what is necessary to remove any inaccuracies from each and every one of your credit reports.

Once your credit reports give an accurate snapshot of your financial picture, it is time to get your FICO score. Keep in mind that each credit bureau charges about $14.95 to get your score. However, it is generally not necessary to check all three FICO scores — one should suffice — unless you intend to apply for a loan. In that instance, check to see which of the three credit bureaus the lender uses (typically a lender will only check one FICO score).

If your FICO score isn’t quite where you would like it to be, there are significant things you can do — starting today — to improve your score.

The most important thing that you can do to improve your score is to pay your bills on time, every time — late payments will always negatively impact your score.

If, however, you are finding it increasingly difficult to pay the minimum balances on your bills, call your creditors and set up a reasonable payment plan. More often than not, creditors appreciate your honesty and willingness to stay current on your bills and are therefore more likely to work with you if you can just make that phone call and advocate for yourself. In some cases, lenders and credit card companies have offered to lower minimum monthly payments if it is agreed that you will stop increasing debt with that lender — and some companies have gone so far as to stop interest from accruing once a payment plan is setup. When it comes to maintaining and keeping a strong FICO score, it never hurts to just simply ask.

It is important to check your credit reports and your FICO score at least once a year. Being savvy about your FICO score can save you a lot of money in interest over the years. And remember, there are many small but important things you can do — beginning today — to improve your score.

Melissa Haslam, MSW is a social worker at the Musicians’ Assistance Program.