When you borrow money, one of the most important things to consider is the interest rate you will be paying. This is the money you pay to the bank in return for them lending you money. It is like a fee. You never see it again.

But it is much more. It is determined by three major factors.

1. The Federal Reserve Discount Interest Rate.

The first factor, the Federal Reserve Discount Interest Rate, actually has nothing to do with you. It is totally outside of your control. Banks and other lending instutions don't simply lend you money. They have to borrow this money from Federal Reserve Banks. The discount rate is the interest rate the institution pays the Federal Reserve Bank for a short-term loan. The rate is determined by the directors fo the Federal Reserve Banks.

When the Fed directors raise or lower interest in order to keep the economy healthy, almost all loans eventually reflect these changes. The discount rate has a direct effect on the prime interest rate that is charged commercial customers with high credit ratings.

2. Your credit report and score.

This is where you really can impact your score. There are three main companies that gather and sell the information about where you work, live, how you pay your bills and your financial history: Experian, Equifax and TransUnion. These credit bureau have keep close tabs on you. They are in close contact with all banks and lenders.

Anytime you apply for credit, auto insurance or an apartment, your credit report will be pulled. Your report will list all the loans you have now or had in the past. The repayment of these loans is also listed. If you missed a payment by over 30 days, it will show up. And it will negatively impact your report. And your credit score.

Your credit score tells the lender how likely it is that you will pay your bills. If you have a high score, it is likely that you will be a good borrower. If you have a low score, there is a chance that you will default on a loan. This shows the lender what sort of risk you are as a borrower.

You can keep your report clean and your score high by paying your bills on time and using your credit wisely. Make sure that you know what is on your report, as almost every person in the U.S. will have false information on their report during their lifetimes.

3. Lender business.

Banks and lenders are not loaning you money to be nice. They are in business to make money. They live in a competitive world and are looking for good business. They don't want to charge too much -- they won't draw people in. But if they charge too little -- they can't make a profit.

That is why you should shop around. But be selective. By letting every lender in town pull your credit report, your score could go down. Three or four inquiries to your credit in a short time period is typically as far as you can go. You can get initial quotes from lenders before they pull your credit.

The three factors determine how much you will pay to borrow money from a bank or other lender. In order to get the best rate possible -- and pay the least amount of money back -- you should work to maintain a high credit score and take the time to shop around for the best rate.