08/09/2013 05:19 pm ET

There Are Many Credit Scores... So Which One Should You Pay Attention To?

There's a common misconception out there that everyone has ONE credit score, perhaps assigned by a government agency and used by financial institutions to determine your creditworthiness. But this is not true.

There are many credit scores, created by many for-profit organizations (not a government agency) and used by many credit reporting agencies (CRA's) to provide you with their own version of your credit score. The most famous and widely used credit score is the FICO score but even that score is applied slightly differently by the credit reporting agencies that use it.

When you apply for credit, creditors will pull in credit scores from multiple sources, including FICO scores from different CRA's, as well as VantageScore, which is a new up-and-coming credit score, and perhaps other credit scores from other sources. Then they'll look at all of these numbers and compare it against the parameters their organization has established and decide whether or not to lend you money. (For example, some financial institutions will pull the FICO scores from Experian, Equifax, and TransUnion and they'll make their lending decision based on the middle of the three scores).

So with all these different organizations creating different credit scores, how can you POSSIBLY pay attention to each and every one of them? You simply don't have the time or energy to check every single credit score about you and optimize it. It's impossible to check every score and try to improve that specific score... because there simply aren't enough days in the year. So what can you do? How can you make sure that you have a fair chance when you go into a bank to borrow money or when you apply for a credit card?

Here's the advice I give my clients: Even though there are many different credit scores, EVERY credit score is based on your credit habits -- each and every credit score is derived from a calculation about how you manage your credit.

So if you focus on credit habits instead of on every credit score out there, you'll have the best chance of improving almost all of them.

Good credit habits are simple, even if everything else about credit scores are complicated! Good credit habits are easy to adopt and will have a positive impact if you are consistent.

So if you don't know which credit scores your lender is going to pull, and you are realistic enough to know that you can't possibly work on every single credit score out there, then make sure you follow these simple habits:

1. Pay your bills on time.

2. Pay off your debts (or, in the case of credit cards, at least pay them to 20 percent of the credit limit).

3. Keep your accounts open and active -- the older your accounts are, the better; especially if they are used regularly.

4. Maintain a mix of types of credit (such as credit cards, auto loans & a mortgage).

5. Pull your credit reports from the big three CRA's (Experian, Equifax, and TransUnion) regularly and check them for accuracy.

If you do these 5 things, it doesn't matter which credit scores your financial institution uses. By maintaining consistency in these areas, you are most likely going to have a positive impact on all of your credit scores.