Virtually everyone in the United States has a credit report. Credit reports are an important factor in the lives of most people. These reports are like a running log, or diary, or your credit transactions. A good credit report can be a great asset to an individual just as a poor report can make it difficult for people to better their lives. There are three major credit report agencies in the U.S., Transunion, Equifax and Experian. All work in the same way. The agencies take your credit history, accounts, and trends to establish your personal credit rating. It is a complicated process, but if you apply some common-sense financial practices, you can raise your rating as time goes by.
The most basic aspect of any credit rating is how individuals pay their bills. Too many missed payments or late payments will lower your score, so it is important to always make your payments on time. Another consideration is having too many credit card accounts. Once you have a good credit rating, you will begin getting offers from banks that want your business. The general rule is to have no more than a couple of credit cards. If you are going to have multiple accounts, it is best to have one Visa and one MasterCard, although some people prefer American Express cards. Another thing to watch for is your balances.
Credit card balances are important because they show the credit bureaus how you manage your accounts. It is best to use no more than 60 percent of your credit card limit. So, if you have a $1,000 credit limit, try to keep your balance around $600. If you use too much of your balance, it tells the bureaus that you are stretched for money. Be smart with your accounts, and a good credit rating will follow.