How Credit Works

A credit score is a snapshot of your credit history at a particular point in time, ranging from 300 to 850. When many people reference credit scores, they are generally referring to their FICO® score. FICO considers your repayment history, the amount of money you owe, the length of your credit history, your credit mix, and any new credit requests. Each of these factors are weighted (like a GPA!) when calculating your credit score. For example, making all of your payments on time is more important to your score than the mix of your credit.

Your credit report is monitored by three consumer credit reporting agencies: Equifax, Experian, and Transunion. Your credit report contains the history of your credit use. Information on your credit report can include any business or company that extended you credit, loans in your name, your payment history, and bankruptcies. Depending on the information, details can stay on your credit report from 7 to 10 years.

Federal law requires that each agency provides a free credit report every 12 months. To request your free annual credit report go to www.annualcreditreport.com. 

1. Consider a secured credit card. This is a credit card you can get through your bank. They will ask you to give them cash upfront as "security" in case you are unable to pay your balance. Works just like a credit card!
2. Consider a store credit card with a small limit. Emphasis on small. A good example of a store credit card may be a Best Buy credit card. You might use a store card like this to purchase a new laptop for class or other school materials.