You've probably heard that good credit makes it easier to borrow the money you need and secure a good interest rate. But what do credit scores actually mean, and how can you boost your credit score?

One of the most common credit scores is known in financial circles as a FICO® score. It is a three-digit number, between 300 and 850, that provides lenders and other financial institutions with a summary of your credit history. The higher your score, the stronger your credit, and more options you'll have available when you go to borrow money.

The algorithm for determining each individual's credit score depends on the bureau calculating the score, which means you may have a slightly different score at one credit bureau than another. But most financial professionals agree that it's calculated based on factors including your payment history, how much (and what types of) credit you have, and how long you've been using credit.

Understanding what goes into calculating your credit score can help you improve yours. Try these 5 tips to achieve (or maintain) a great score and look attractive to lenders.

Pay Your Bills on Time, Every Time

Making all your payments on time is key for establishing excellent credit — after all, lenders want to know you have a reliable track record of paying what you owe. Make your loan and bill payments by their due dates, and ensure you're making at least the minimum payments on your credit cards each month.

Stay on top of payments by keeping track of due dates in a calendar. Or consider setting up automatic bill payments with your financial institution to ensure you never miss a payment.

Maintain a Low Balance

A significant part of your credit score is determined by your debt-to-credit limit ratio, or how much credit you have access to compared to how much you're actually using. For example, if you have a $300 balance on a credit card with a $1,000 limit, you'd have a debt-to-credit limit ratio of 30% on that card.

If you have multiple credit accounts, you'll need to take into account your ratio across all of them. Let's say you have one credit card with a $1,000 limit and a $300 balance, another card with a $500 limit but no balance. Your credit limit here is actually $1,500, spread across two cards, so your debt-to-credit limit ratio would be 20%.

Aim to keep your overall debt-to-credit limit ratio under 30% to maintain a great score. And avoid maxing out your cards, since that signals financial stress.

Keep Your Oldest Account Open and in Good Standing

Want to know one of the biggest mistakes you can make after paying down your debt? Closing your oldest account. That's because the length of your credit history plays a key role in your credit score — so the older your credit accounts, the better. Closing your oldest account makes your credit history look shorter than it really is, which can lower your score. Consider your financial goals: if it makes sense to do so, keep your oldest account open and in good standing so it can continue to help your score.

Avoid Applying for Too Many Credit Applications

If you're looking to borrow money, be selective and shop around before you start applying. Anytime you apply for new credit, potential lenders make what's called a “hard inquiry," which means they pull your credit information for the purposes of reviewing an application. Anytime this happens, your credit score could take a brief hit. If you're making one or two applications, that may not have a significant impact on your score — but several inquiries in a short time could lower your score for up to a year.

By the way, if you're concerned about other credit checks — for example, when you sign up for a new utility, or you request a copy of your credit report — you don't need to worry about your score. These are called “soft inquiries," and won't impact your credit.

Monitor Your Credit Report

Speaking of requesting your credit report, it's a great way to keep an eye on your score. Reviewing your credit history also gives you a chance to spot any mistakes that could be affecting your score.

It's a good idea to check on your credit score and credit history at least once a year or before you apply for any new car loan or mortgage. And if you find a mistake, notify each of the three credit bureaus — Equifax, Transunion and Experian — so they can investigate.

Maintaining good or excellent credit gives you more options for borrowing. And, if you have a specific goal in mind, we're here to help. Click here to learn about lending solutions at PNC.

Whether you're looking to start the home-buying process, pay for school, consolidate your debt or something else, we'll help you find the right solution to achieve your goals.