What is a credit history?
Sometimes, people talk about your credit. What they mean is your credit history. Your credit history describes how you use money:
- How many credit cards do you have?
- How many loans do you have?
- Do you pay your bills on time?
If you have a credit card or a loan from a bank, you have a credit history. Companies collect information about your loans and credit cards.
Companies also collect information about how you pay your bills. They put this information in one place: your credit report.
What is a credit report?
Your credit report is a summary of your credit history. It lists:
- your name, address, and Social Security number
- your credit cards
- your loans
- how much money you owe
- if you pay your bills on time or late
Why do I have a credit report?
Businesses want to know about you before they lend you money. Would you want to lend money to someone who pays bills on time? Or to someone who always pays late?
Businesses look at your credit report to learn about you. They decide if they want to lend you money, or give you a credit card. Sometimes, employers look at your credit report when you apply for a job. Cell phone companies and insurance companies look at your credit report, too.
Who makes my credit report?
A company called a credit reporting company collects your information. There are three big credit reporting companies:
These companies write and keep a report about you.
Can I see my credit report?
You can get a free copy of your credit report every year. That means one copy from each of the three companies that writes your reports.
The law says you can get your free credit reports if you:
- call Annual Credit Report at 1-877-322-8228 or
- go to AnnualCreditReport.com
Someone might say you can get a free report at another website. They probably are not telling the truth.
What is a credit score?
A credit score is a number. It is based on your credit history. But it does not come with your free credit report unless you pay for it.
A high credit score means you have good credit. A low credit score means you have bad credit. Different companies have different scores. Low scores are around 300. High scores are around 700-850.
Do I need to get my credit score?
It is very important to know what is in your credit report. But a credit score is a number that matches your credit history. If you know your history is good, your score will be good. You can get your credit report for free.
It costs money to find out your credit score. Sometimes a company might say the score is free. But if you look closely, you might find that you signed up for a service that checks your credit for you. Those services charge you every month.
Before you pay any money, ask yourself if you need to see your credit score. It might be interesting. But is it worth paying money for?
What if I do not have credit?
You might not have a credit history if:
- you have not had credit card
- you have not gotten a loan from a bank or credit union
Without a credit history, it can be harder to get a job, an apartment, or even a credit card. It sounds crazy: You need credit to get credit.
How do I get credit?
Do you want to build your credit history? You will need to pay bills that are included in a credit report.
- Sometimes, utility companies put information into a credit report. Do you have utility bills in your name? That can help build credit.
- Many credit cards put information into credit reports.
- Sometimes, you can get a store credit card that can help build credit.
- A secured credit card also can help you build your credit.