Good credit should not be a mystery. It is actually very straightforward. Financial institutions pay a credit bureau to compile information about consumers. These reports are similar to high school and college grade transcripts--instead of collecting grades, credit bureaus collect credit information. There are three credit bureaus that compile information about your credit history. They are Equifax, Experian and Trans Union. 

The types of information collected includes, timeliness of payments, lines of open credit, credit limits, type of loans taken out, credit inquiries and any judgments. This will be made more clear when you see this example.

As you can see, the credit report lists the lines of credit and who the creditor is. Credit lines are also listed. Payment history is also tracked. "x" means inactive for that month, "1" signifies an on-time payment, "2" signifies 30 days late, "3" signifies 60 days late, and so on. Your goal should be all "1's". 

To get good credit, you should:

• Keep your own checking account and savings account
• Get a copy of your credit report (see below)
• Establish a credit card in your own name. Most college students at four year schools are approved easily.
• Pay bills before the due date
• Know how a loan officer looks at your credit report 

To find out what the credit bureaus have compiled on you, you can write them at:

Experian - For a copy of your report, call 1-888-397-3742 or write them at
P.O. Box 2104
Allen, TX 75013 

Loophole! If you want to get a free report, cut and paste this letter (he hee hee) 
Free credit report gambit letter

Trans Union Consumer Relations - For a copy of your report call 1-800-851-2674 or write
P.O. Box 390
Springfield, PA 19064

(There is a processing fee.) 
Loophole! If you want to get a free report, cut and paste this letter (he hee hee) 
Free credit report gambit letter

Equifax Credit Information Services - For a copy of your report call 1-800-685-1111 or write
P. O. Box 740241
Atlanta GA 30374-0241

(There is a processing fee.)
Loophole! If you want to get a free report, cut and paste this letter (he hee hee) 
Free credit report gambit letter

COMMON credit bureau mistakes: Fixing credit report mistakes

• your dad has the same name
• relative with a similar name
• relative with a similar social security number
• anyone with similar name or social security number 

Use form letters available at Form Letters to fix these mistakes. 

The "Fair Credit Reporting Act" protects you from incorrect information hurting you. If you find that you are getting turned down for credit and think that there's something fishy, you should get a copy of your report. You have the right to challenge incorrect information.

If you're thinking, "gosh, now that I know how information is compiled on me, I can actually manipulate my credit report to BOOST my credit score", then you're on the right track. People who have better credit scores qualify for lower cost loans and lower interest rates. In fact, many of those "awesome car deals with ZERO percent financing" are only available to "qualified buyers", i.e. those with good credit. 
 

  
How do we take proactive steps towards BOOSTING our credit score?! We'll learn that in the following section when we turn that feared piece of plastic into your credit manipulation instrument. 

Next we'll learn to use a credit card as a financial tool...