Think of your credit score like you would a grade in school. A teacher calculates grades by taking scores from tests, homework, attendance and anything else they want to use, weighting each one according to importance in order to come up with a final single number (or letter) score. Your credit score is calculated in a very similar manner. Instead of using the scores from pop quizzes and reports you wrote, it uses the information in your credit report.

The number itself can range from 300 to 850 . The formula for exactly how the score is calculated is proprietary information and owned by Fair Isaac. Here, however, is an approximate breakdown of how it is determined:

• 35% of the score is based on your payment history. This makes sense since one of the primary reasons a lender wants to see the score is to find out if (and how timely) you pay your bills. The score is affected by how many bills have been paid late, how many were sent out for collection, any bankruptcies, etc. When these things happened also comes into play. The more recent, the worse it will be for your overall score.
• 30% of the score is based on outstanding debt. How much do you owe on car or home loans? How many credit cards do you have that are at their credit limits? The more cards you have at their limits, the lower your score will be. The rule of thumb is to keep your card balances at 25% or less of their limits.
• 15% of the score is based on the length of time you've had credit. The longer you've had established credit, the better it is for your overall credit score. Why? Because more information about your past payment history gives a more accurate prediction of your future actions.
• 10% of the score is based on the number of inquiries on your report. If you've applied for a lot of credit cards or loans, you will have a lot of inquiries on your credit report. These are bad for your score because they indicate that you may be in some kind of financial trouble or may be taking on a lot of debt (even if you haven't used the cards or gotten the loans). The more recent these inquiries are, the worse for your credit score. FICO scores only count inquiries from the past year.
• 10% of the score is based on the types of credit you currently have. The number of loans and available credit from credit cards you have makes a difference. There is no magic number or combination of types of accounts that you shouldn't have. These actually come more into play if there isn't as much other information on your credit report on which to base the score.

A. In Title 11 of the United States Code (the Federal Bankruptcy Code ), there are four bankruptcy filings:

• Chapter 7 - Liquidation
• Chapter 11 - Reorganization
• Chapter 12 - Adjustment of Debts of a Family Farmer with Regular Annual Income
• Chapter 13 - Adjustment of Debts of an Individual with Regular Income

The filing generally depends on the person's financial situation. Reportedly, the most common filing is Chapter 7 . Companies, married couples and individuals are allowed to file Chapter 7.

A debtor filing Chapter 7 is essentially scrapping everything and starting over, hoping for a clean financial slate. Basically what happens is that once the filing is underway, an administrator or trustee is appointed to maneuver the sale of the debtor's assets . This does not necessarily mean that everything the person owns is sold. Both federal and state laws allow for certain exemptions , meaning that the debtor might get to keep some property, such as his or her primary residence or personal items like clothing. Once the debtor's assets are liquidated , the trustee pays certain creditors a portion of the money raised. Obviously, not all of the creditors receive money from the proceeds, so many of those financial obligations are "forgiven," or discharged . Once someone has filed for bankruptcy under Chapter 7, he or she cannot file again for seven years, and debts that were not forgiven in a previous filing will not be discharged in the next filing.

It is important to note that there are certain debts for which the debtor will receive no forgiveness. Alimony, child support and taxes are not discharged under any bankruptcy filing, and student loans are seldom discharged (see this page for details). So, if a lot of your debt falls into these categories, you might be better off filing Chapter 13.

Chapter 12 and Chapter 13 are basically the same filing, except that Chapter 12 is for family farmers and Chapter 13 is for other individuals. As long as you have a steady, reliable income, less than $269,250 in unsecured debt and less than $807,750 in secured debt , you can file Chapter 13. Once the filing is made, the debtor is assigned a trustee. The debtor and trustee develop a proposal for a repayment plan . The court decides whether to accept or alter the plan or dictate another repayment plan altogether. Once the plan is decided upon, it can last anywhere from three to five years.

You may be wondering why someone would file for Chapter 12 or 13 instead of Chapter 7. There are a couple of reasons for this:

• Under Chapter 12 and 13 filings, debtors do not have to liquidate their assets -- they actually get to keep everything, not just the items that meet the legal exemption.
• In most Chapter 12 and 13 cases, the debtor is repaying only a percentage of what he or she actually owes -- sometimes as little as 30 cents to 50 cents on the dollar!

Chapter 11 bankruptcy is very similar to Chapter 13. The main difference is that there is no limit regarding the amount of money owed by the debtor. Originally only intended for large corporations, individuals can now file Chapter 11 as well.