First of all, you need to know what you have to do to start building your credit resume. When you start paying the rent and repaying your student loans, that starts your credit history. When you get a credit card and use it, you are influencing your credit report and score. When you become adventurous and fiddle around with real estate, that information gets recorded on your credit report. Whether you are a good little credit user or bad one gets recorded as well. Using checks or debit cards DO NOT influence your credit report or score if they are tied to banking accounts.

Credit Report – Your Financial Report Card
A credit report does not care if you help old ladies cross the street or save kitties from trees. A credit report reduces your worth to what your credit history is.

There are three little pigs that collect your credit history: Equifax, Trans Union, and Experian. They know if you have applied for a credit card, loan, or mortgage. You are, by law, allowed a free credit report once a year. While many websites offer you access to your report, the only website to trust is www.annualcreditreport.com. Others may try to charge you money for your report, and that’s not cool.

Credit Report information
First, you’ll see your name, Social Security number, birthday, all addresses you’ve lived at, and your employers. The report DOESN’T have your medical history, race, gender, religion, political party, or criminal record. Again, money wins over morality. Welcome to America.

Next, you’ll see the accounts of your credit cards, loans (student and others), mortgages and real estate. You will see your payment history, and if you made a late payment it will be highlighted in red for you. You will NOT see your bank account.

You will also see a section about public records. It will show whether you declared bankruptcy, paid your taxes, and if you were a deadbeat mom or dad by not paying child support.

Finally, a section shows companies that requested your credit report and the name and address of creditors you’ve dealt with.

By the way, while positive information stays on your report forever, negative information stays on for seven years. A bankruptcy stays on for seven to ten years! Like Monopoly, it goes on for a long time.

So why should you check your report? It helps you keep tabs on your financial activity and makes you stay on top of your bill payments. It also lets you see if people are taking out loans and credit cards in your name without you knowing so you can put a stop to it immediately.

But the most important thing is that all of this information is put together to make a magic number called a credit score.

Credit Score: Big Number, Even Bigger Meaning
Through the power of science or witchcraft, a company called FICO figured out how to take all the information in your credit report and turn it into a number. You can’t get this number for free. You either have to buy it when you get your free credit report or buy it from www.myfico.com. You don’t have to get it, but you should realize how important it is.

A credit score ranges from 300 to 850. The HIGHER it is, the BETTER. A high credit score means that you are more likely to pay off loans and credit cards and creditors will be more willing to give you some credit.

Your credit score is based on five things, but to paraphrase Animal Farm, some are more equal than others:

• Payment History (35%) – Are you paying your bills on time? Are you paying them AT ALL? This plays a major role in your credit score. No one wants to give loans to someone who won’t pay them back.
• Amounts Owed (30%) – Are you maxing out your credit card(s) all the time? If you continue to go over your spending limit, that will hurt your credit score. Also, if you spend close to your spending limit, that will also hurt your credit score.
• Credit History (15%) – Are you an old pro at using credit cards? The longer you successfully use credit, the more it helps your score.
• New Credit (10%) – If you are applying for a lot of new credit, you can hurt your credit score, so sloooow dooown.
• Types of Credit (10%) – If you can juggle several credit cards and loans successfully, then you are a credit king.

To sum it up, if you are being responsible with your credit cards and pay your bills on time, you will have a higher score than if you skip the bills to play Smash Wallaby (or whatever cheap videogame you like).

Lenders see how responsible you are by looking at your credit score. Even potential employers can look at it. This is why you have to keep it high. Generally speaking a good score is considered above 700.

If you have a bad credit score, pull yourself together! Make your payments on time, use your credit card wisely, and you’ll be able to bring that number up to the stars.