Credit Report Know-How for the 20-Something Consumer

A Credit Article Contributed by Kris Olds

Credit Reports and the Savvy Consumer

Almost every person in their 20's has heard about a "credit report". Not quite as intimidating as the college report cards that used to come in the mail, a credit report is a tool used by lenders to track your credit-worthiness. If you have a credit card, auto loan or mortgage payment, you have a credit report and you should know what it says.

Everything You Wanted to Know about a Credit Report (but Were Afraid to Ask)

Starting out with the basic record keeping, a credit report is a tool that tracks your history of loans, be they credit cards or a mortgage. Every time a credit card is opened in your name, or you are listed as a user on another's account, an entry is made on your credit report. Why is this useful information? This credit report will be a part of your history for as long as you are a consumer. Think of it as a credit "rap sheet".

All your crimes, or accomplishments, will show up for credit card companies, mortgage brokers, landlords, even employers to look at. A credit report can make or break your future, all based on your past.

What information is on a credit report? As mentioned above, each time you open an account, an entry is made. Each entry will list who the loan is through, what your payment record is, how much money you have available to spend and how much money you still owe. There are several different credit reporting companies and each utilizes a slightly different system.

A common practice is the assignment of a FICO (r) credit score, a number ranging from 300-850, with most people having a score between 600 and 700. This number is constantly fluctuating, depending on how regularly you pay your bills, any loans or lines of credit that have been opened and how much of the line of credit is being used.

Now that you know what a credit report says, how do you see yours? Being the computer savvy generation that we are, online is a great way to start. The Federal Trade Commission (www.ftc.gov) has links to the three major credit reporting companies as well as information about how credit can affect you long term, how to repair a credit score and how to dispute any inaccurate information.

A 10 Year Reunion is a Lot More Frightening Than a Credit Report.

A credit report need not be a scary thing. This isn't a "Big Brother" approach to tracking your spending. This is a way for lenders to assess risk in loaning you money or offering you a mortgage or rental contract. It is in your best interest, as a smart, hip 20-something to know what your record is. If there were a tool out there that tracked your dating history, and your future partners could check it out, you would want to know what it had to say, wouldn't you?