Think of your credit report like a report card that shows how you’ve managed your finances. Your credit report is kept on file by credit bureaus and includes your overall credit score, which can range from 300 to 850. The higher your credit score, the less risk you pose for potential lenders and therefore the better interest rates you’ll receive which translates to more money in your pocket for other things.

Here’s how it works…

There are three national consumer credit bureaus (Equifax, TransUnion and Experian) and they collect information from credit-granting companies like banks, finance companies, department stores, tax authorities, landlords, etc. From that information they each compile credit reports. The report is a file of information from all the companies you have done business with. It will show:

• Your open accounts with balances, including credit limits
• Whether you pay on time and in full
• Whether you make late payments or miss payments
• Whether any of your accounts have been turned over to a collection agency
• Any suits, judgments or tax issues, etc.

Learn more about each section of a credit report.