Fair Isaac didn't start working on the idea of a quantitative credit scoring system until 1958, and didn't introduce its credit bureau scores until 1981.

That's right: banks used to lend people money without FICO scores. Instead they relied on stuff like employment history and, gasp, character. To get a loan, you used to have to meet with an officer or even a committee face to face, and they'd assess your reliability

As the foreclosure crisis has shown, relying solely on the quantitative can lead to disaster. The old-fashioned bankers might have been on to something. The Wall Street Journal reports (subscription required) that credit card issuers are now expanding their underwriting standards to include a focus on the applicant's line of work and where they live. If you work in construction in Nevada right now, you might have a tough time getting a loan.

This newfound prudence can be tough for some business owners who are seeing their lines of credit slashed for no reason other than that they're in a certain industry -- even if they happen to be faring quite well. But for most individual borrowers, I would say that a slash in your credit availability should be a warning sign that you're skating too close to the financial edge. The bank's metrics that tag you ask risky may be dead on, whether you realize it or not.

More about credit scoring:

Credit scoring myths

Help your credit score by adding your statement

If you have had a loan, credit card or any other type of credit line in the past 21 years, TransUnion is offering up to 9 months of credit monitoring services as part of a class action lawsuit settlement. You can opt for the basic service which includes 6 months of credit monitoring as well as unlimited access to your credit report and TransUnion credit score. This option allows you to still receive some form of cash from the settlement. If you don't care about the cash portion you can opt for the enhanced service which nets you 9 months of monitoring and a mortgage simulator to help you see what your mortgage rate would be as well as access to your insurance scores.

The credit monitoring service offered by TransUnion provides 24 hour monitoring and email notification of major changes. A credit expert notes that all consumers can benefit from a free credit monitoring service and that TransUnion's credit monitoring is top notch. Experts are less impressed by the mortgage simulator and the offer of a TransUnion score because the number isn't your real FICO score and less than 5%of banks use the TransUnion number. While it isn't the same number the TransUnion score is usually within 40-50 points of your FICO score and may at least alert you if your score is drastically lower than it should be.

While I think this is a good deal for a free service that may prove useful, it's sad that it is only coming about due to a lost lawsuit based on TransUnion's greed. You see back before 2001, TransUnion was selling customer information to marketing lists and others. That's right this credit monitoring is just a way of saying sorry, even though we didn't do anything wrong, for all of that junk mail you used to receive!

You can visit www.listclassaction.com to sign up for your benefits, which you can activate after the court accepts the settlement.

File this one away under stuff that sounds like bad news but is actually good news. Mortgages are really hard to get, unless you have great credit (a FICO score of over 700, and considerably higher if you want an interest-only loan) and crazy stuff like, oh, proof of income.

That's right: if you've wracked up credit card debt and missed payments, you'll be stuck renting. Here's why that's good news. First, more stringent standards lead to fewer foreclosures and fewer financial lives ruined. Second, clamping down on stupid lending practices that give money to people who can never pay it back helps keep prices down. To understand how this works, imagine heading off to an auction where you had to use real money but half the audience got to bid with Monopoly money. It isn't fair, but that's exactly what happened to responsible first-time home buyers who had saved up a down payment and wanted to buy a home the right way. They had to compete for real estate with people who were driving leased Lexus' and had no down payment cash back at closing loans that they never intended to repay.

And if the tighter lending standards mean you can't buy a home now, relax. Move into the least expensive but tolerable rental you can find, stop eating out, drive an old car, and save up a down payment while your credit score improves. Believe it or not, people used to take pride in the sacrifices they made in the pursuit of the American Dream.

I'm continually encouraged by the quality of some of the comments we get here on WalletPop (To the guy who keeps spamming us with links to obscene stuff: I'm not referring to you!). In response to a post I wrote about bailouts for distressed homeowners, one reader had an interesting suggestion:

To me, the fairest solution would be simply to not record foreclosures from the evicted persons' credit reports, if the risks of the associated loan were not disclosed to the buyer and the buyer purchased for living, not speculative, reasons. If homeowners have to again become renters, I have to say, it won't be so bad and, when prices fall again, they'll be able to get back into the market with much more confidence, because it will be affordable.

The logistics of it aside -- not sure how you could convince lenders/the credit bureaus to expunge bad stuff from people's credit reports -- the concept is intriguing. It would be a way to let people get out of bad situations without having their credit hit so badly that they won't be able to by a home for years without using a subprime lender which, I seem to recall, was one of the causes of this problem in the first place.

I'm sure this will never happen and, if it did, it would severely damage the credibility of credit reports/FICO scores. Still interesting to think about.

I find that some of the most educated and experienced people I know don't understand how credit scores are determined and maintained. It seems that this score which essentially controls your ability to achieve the "American Dream" is a mystery to most people. The slew of advice makes it even harder separate the wheat from the chaff. Thankfully the Today Show has provided some wonderful information to help inform consumers about their credit score.

Today, credit rating bureau Experian rolled out the "Emerging Credit Score, a new credit scoring tool to assist lenders in evaluating the creditworthiness of unbanked and underbanked consumers."

The Emerging Credit Scores, and similar programs from the other bureaus, rely on telephone and utility bills, and catalog/internet purchase histories to arrive at a credit score.

The Wall Street Journal reports (subscription required) that "the new scores could be good news for those who pay their bills promptly but don't have established credit histories. In the past, banks often ignored this group because they had no way of evaluating the risk."

This is great news. For too long, it's been difficult to establish a good credit score without using credit cards. That's no problem if you use your card responsibly but, according to CardTrak, 60% of people don't pay off their credit cards every month. In addition, a Dunn and Bradstreet study found that credit card users spend 12% to 18% more when using a card instead of cash. This is wonderful for retailers but bad for you.

We should reconsider the notion of getting a credit card to build credit. Innovations like the Emerging Credit Score are making it easier to qualify for a mortgage without getting involved with credit cards, and that's a great option for a lot of people.

Who's made some late payments on their credit cards lately? Raise your hand.

If everyone reading this article has kept their hands down, either there are a lot of people out there lying, or a lot of people who don't want to feel like an idiot for raising their hand in front of a computer screen. According to CardTrak, an information portal on credit cards, the percentage of people late on their payments is the highest it's been in three years. In 2007, credit card companies made $18.1 billion dollars in penalty fees (for a little comparison, the year before, they made more than $17 billion in penalty fees.)

Fortunately, there is some hope out for anyone with an increasing history of late fees and decreasing credit score, according to John Ulzheimer. He founded Credit.com and wrote the book with the reassuring title, You're Nothing But a Number, and he said that while Americans' credit scores might be tanking, a credit score, in the end, is truly our friend.

Low-budget television ads and promotional websites are full of tricks for boosting your credit score.

A piece in the New York Times took a look at a few of these programs which, according to the Times, the strategies often "include piggy-backing onto a stranger's credit card and receiving pay stubs from a fake employer. The latest comes from a San Diego company, TradeLine Solutions, which claims it can improve a borrower's credit score by adding somebody else's top-notch credit history to the borrower's history."

But industry experts warn that many of the tactics for improving credit scores that seem to good to be true are -- and often, they border on fraud and could get you into serious trouble. Trying to use other people's good credit to improve your bad credit is definitely suspect, and the credit bureaus are working hard to crack down on it.

How do you know if a given method of improving your credit score is legit? Basically, anything that doesn't involve you behaving responsibly with your money is suspect.

And if you have a poor credit score, you may not even be doing yourself a favor using shortcuts to a better score: It'll just make it easier for you to get overextended again, in the same way that using a Sharpie to change the nutritional facts on the bag of Doritos is unlikely to help you get in shape.

To get in better financial shape by improving your credit score, check out Liz Pullman Weston's great book Your Credit Score.

Your credit score is probably one of the biggest financial mysteries ever invented. The FICO score is created through some fancy math based upon a zillion pieces of information in your credit file. Do consumers really understand them? Well it's kind of hard to understand something that is so secretive. There are guides to improving your credit score, but still, no one can tell you exactly how much one thing or another will increase or decrease your credit score.

So today I'm providing one little tidbit of information from my own credit file. Through some class action settlement, I was given three free months of access to Equifax's "Score Watch" service. This is not something I would pay for. I believe that the services offered by the credit agencies are generally a waste of money. But I got this for free, so I'm using it.

Here's what I found when I logged on today. Last week there was an inquiry on my credit file from a credit card company through which I had applied for credit. The same day, my credit score went down 11 points. So there you have it. That was my decrease for an inquiry, which typically causes your score to go down because it signals that you may be "shopping" for credit, which is considered negative.

I have no idea if that's a typical decrease related to an inquiry.... due to the whole secret formula thing that the credit score people have going on. So of course, your decrease related to an inquiry may be more or less and no one can tell you how or why that is or give you a better idea of exactly what your decrease may be. But that was mine.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Parents used to be able to assist children with building a good credit score by adding them as an authorized user on a card. In the past when you were an authorized user on your parent's cards you were able to borrow their good credit rating as well. When giving someone a rating FICO would essentially attach the credit records of people who listed you as an authorized user to your credit history. That way a child who wanted a card could first be added as an authorized user on their parent's card and then when the child applied for his or her own credit card, the parent's credit history was used to give that child a good credit score even though that child had no individual credit history.

Well that can't happen anymore. FICO closed that route about a year ago because they found people were actually making money by adding others to their credit cards as authorized users (for a fee, of course) to help people with bad credit ratings get good ones. You may still get a scam email promising to fix your credit score. If someone says they can fix your credit score quickly for a fee, run, don't walk away.

Unfortunately, if you do have a bad credit score there is no quick fix unless that score is based on inaccurate information. For example, if you look at a copy of your credit report and see credit items that are not yours or that do not accurately reflect your payment history, correcting those errors and getting them off your report can improve your score quickly. But, if the information on the report is accurate, the road to improving that score can take a long time.

Back in the day, you got a credit card with a certain interest rate, and unless you failed to pay your bill on time, that was that. There was sometimes a clause in your credit card agreement that gave the credit card company the right to adjust your rate at certain intervals. But that was often negotiable, and the people who most often had their rates changed were those who failed to pay their bills on time.

Over the years, the credit card agreements became more restrictive. The companies say this is because bad credit card holders were costing them money, and they were only recovering those costs with higher rates and fees.

Sometimes when you apply for a loan for a major purchase, such as a mortgage, you're told you can improve your credit score if you close some of your credit cards. Don't believe it. In fact, sometimes when you close an older card you can actually cause your credit score to go down.

Credit scoring agencies reward people who use credit wisely. As long as you pay your bills on time and don't rack up balances to max out all your revolving credit cards, your credit score won't be hurt by having a lot of unused credit lines. The best scores go to people who use credit moderately over a long period of time, so the older the cards the better.

Also, credit scoring agencies calculate the total credit available to you (the total of all your credit limits). They then calculate the percentage of debt you have outstanding on all those credit cards (total debt/total credit limits). This is called the debt utilization ratio.

In fact you could be someone who pays their cards in full each month, but because those payments are made after the report has been sent to the credit reporting agency your outstanding debt looks higher than it is. If you're trying to improve your credit score, pay your outstanding debt before the credit card company reports. Reports are usually sent monthly right after the end of a billing cycle. So, check out the amount due on your cards and pay the outstanding amounts before actually being billed. If you do this for a few months before applying for a mortgage you should see a nice improvement in your credit score because your debt utilization ratio will be much lower.

If a mortgage lender does ask you to close some cards, close the newest ones not the oldest ones or your score will actually go down rather than up.

Lita Epstein has written more than 20 books including the Complete Idiot's Guide to Improving Your Credit Score.