A persons credit score is one of the most important numbers they will ever deal with. A credit score is used by many different companies to determine the credit worthiness of a person. Almost every business a person deals with from utility companies to banks are interested in their credit score.

The credit score is based upon the things reported in the credit report. The higher the score, the better. A higher score means lower interest rates and an easier time getting lines of credit. A credit score is made up of the following information:

- 35% is based upon the persons payment history. It will be affected by making payments or not making payments.

- 30% is based upon outstanding debt. This is any debt that is yet to be paid.

- 15% is based upon the length of time the person has had an established credit history.

- 10% is based upon the inquires made into the account. This is the credit checks, basically, made for this person.

- 10% is based upon the different types of credit the person has.

A credit score is very important to understand. This score holds a lot of importance and should be a main priority. Credit is everything these days and having a bad credit score can mean difficulties even getting the simplest thing done, like getting a telephone turned on in your name.

Low credit scores can be costly. A person with a low score often finds they are charged fees and high interest rates on everything. A higher score gives a person much more freedom and allows them to save their money to pay their debts.

If you have a low credit score then you need to work to build it up. You should not apply for credit, get new lines of credit, but instead pay off debts. Work to bring down your outstanding balances and pay off old accounts. It is also smart to keep older accounts and close out newer accounts.

Doing these things will help to bring your credit score up. If you are unable to figure out how to handle debt then you should use a financial expert to help you. They can make suggests and formulate a plan to help you fix your credit.

If your credit history does become very bad then your chances of obtaining credit will be slim. Lenders will see you as a very big lending risk and will either turn your down or make you pay very large interest rates. That said, more and more lenders are starting to relax their lending criteria in order to service the very sub prime market.

Credit scores can be confusing since the actual calculations are very tedious and almost never outright explained. All a person should be concerned with is keeping their credit reports in good shape. This in turn will ensure their credit score is good.

So you need to make sure that you keep up to date with your mortgage and secured loan payments, pay off your store and credit card bills on time, don't get into more debt than you can afford, do not make too many applications for credit and try not to let your bank accounts become overdrawn.

​Most financial advisors will tell you that it is never too early to build a good credit history, but it’s also never too late to start as well. This article explains what credit is and what it takes to achieve good credit history.

Basically, credit consists of borrowing money with the intention and agreement to pay it back at a later date.  Any kind of loan, such as student, home and car loans, and credit cards are examples of credit.  In order for a lender, usually a bank, to agree to lend to you, the borrower, money, your credit history will have to be reviewed and be up to standard with the lenders credit policy.  If you have good credit history, getting a loan for that dream house is in your future.  

Good credit, bad credit.  You hear people talking about it all the time, but what does it mean?  Having good credit means that you pay all of your bills and money you owe on time, all the time.  Lenders know that you are responsible and will take bigger risks on you by lending you more money in the future.  Bad credit means that you historically have not paid your bills on time and have increasing debts.  Having bad credit makes it harder to get loans and almost impossible to get low interest rates on them.

Many students and younger people might have no credit at all.  That’s OK; we all start out at the same spot.  Having no credit simply means that you don’t have a credit card or have never borrowed money from a lending institution, so there’s no recorded history of whether or not you are financially responsible.  If you are new to credit, or have a poor credit history, here are the most basic and easiest ways to build and maintain good credit:

First, make a budget for yourself to manage all of your expenses.  Think of it as a daily schedule planner, but for your money!  Be realistic with your spending abilities and keep track of what you spend your money on by saving copies of purchase receipts.  Save receipts for everything from food and clothing to gas and movie tickets.  Be sure to stick to it.  

Next, open a checking and savings account, or if you apply for a credit card, try to get the lowest interest rates possible and keep the balances low.  If possible, pay the balance off every month and don’t miss payments.  If you want to make a big purchase, save up for it instead of charging it on your credit card.  Don’t buy on an impulse.  Also, every bill, from rent to telephone to utilities, should be paid on time.  On-time bill payments are a great way to build non-traditional credit and show lenders that you are serious about fiscal responsibility.  Keep copies of cancelled checks and bill statements to prove that you have paid on-time.  If you keep up with bill payments, ask your landlord or utility company to write a reference letter explaining how you have been a favorable customer and have had an outstanding payment history.  Lenders like to see these forms of proof that you a responsible with your money.

Once you are on your way to building and maintaining good credit, you’ll want to keep track of where your credit stands.  This is done by viewing your credit report.  Your entire credit history, including every time you use a credit card, make or miss credit card and bill payments, is included in the report.  Any loan debts you have had over the last 7 years, and their payment history, are also included.  In addition, your employment history is kept to show whether or not you can keep a job.  Your credit report should be viewed at least once per year.  Equifax, Experian, and TransUnion are the three companies that you can receive your credit report from.  Be sure to check it for accuracy and contact the credit agency if corrections need to be made.

Having good credit will affect your future for the better, so be smart with it.  Once you have good credit, you’ll be able to get that dream house and car and have a financially secure life.  Even your children’s lives will be affected by your credit, your ability to offer them the best life possible.  Remember, you now have the knowledge and ability to take control of your credit and change it for the better.