redit is a key factor to many aspects of life in America. If you would like to buy a new car or house in the future, then you will need to understand a few things about your credit history. This section will explain what your history is, as well as who uses it. You will learn how to access your history files and what to do if you find errors. There will also be some tips for those who need to establish a credit history.

Your Credit File

Your credit file contains information about your financial situation. It is maintained by several national credit reporting bureaus and is used by businesses to determine whether or not you are an acceptable person to extend credit to. In other words, they determine if you are a good or bad credit risk. It is very important to maintain a good credit history if you plan to make any purchases using credit in the future (i.e. buying a car or home).

How is Credit Determined?

Your credit rating is determined by considering a number of factors. Among them are:

• Your employment history and income - Do you have steady employment with acceptable income?
• The value of your assets - Savings accounts, property, investments, etc.
• The amount you owe on loans - Student, car, home, etc.
• Your credit history - Do you have credit cards and how much do you owe on them?
• Your payment history - Do you pay your bills on time?

If it is determined that you are an acceptable credit risk, you will be awarded credit. If you are late or delinquent on payments and owe more than you make, you will probably be denied credit.

Checking Your Credit File

It is important to check your Credit Rating periodically. Especially now with the increasing risk of identity theft, it becomes even more important. It has been suggested that a person check his/her rating about once a year. There are three major national Credit Reporting Bureau's where you can obtain a copy of your Credit History for a fee.

These companies, along with their contact information, are listed below. Use the telephone numbers to request your credit file if you have been denied credit within 60 days or if you are going to pay for the report using a credit card.

Experian Credit Bureau
P. O. Box 596
Pittsburg, PA 15230
(888) 397-3742
http://www.creditexpert.com

TransUnion World
Consumer Relations
P. O. Box 1000
Chester, PA 19022
(800) 888-4213
http://www.truecredit.com/

Equifax Credit Information Services
P. O. Box 105873
Atlanta, GA 30348
(800) 685-1111
https://www.econsumer.equifax.com

Establishing a Good Credit Rating

Many young people and newcomers to this country often ask the question, "How can I start now to get a good Credit Rating?" Listed below are several things that you can do to begin establishing a favorable Credit Rating:

• Open a bank account
• Maintain steady employment with no gaps
• Pay your bills on time (rent, utilities, telephone, etc.)
• Buy some small items on credit and pay the entire bill when it's due

Remember that establishing good credit takes time and responsibility. If you show that you are able to pay your bills on time, and in full, you will be well on your way to building a good credit history.

Using Your Credit

Once you have established a successful credit history and proved yourself to be an acceptable credit risk, you will be eligible to buy items on credit. Credit allows you to buy larger items such as appliances, cars and even homes while paying for them over a period of time. If you choose to buy an appliance on credit, you can arrange with the store to pay it off within a certain amount of time (ranging from a few months to years).

Check the interest rate and make sure that you can afford to make the payments. Usually you pay the store or agency once a month. The payment must be received by a certain day and you should make sure that you do not miss this deadline. This will allow you to keep your good credit history and you won't be charged extra interest or late fees.

Buying a car is a more detailed process because the loan, or line of credit, is much larger. You must fill out several forms and be approved for this large loan. The dealership that is selling you the car will sometimes be able to offer you a finance plan, but it is often a good thing to check around with banks or credit unions as well. Choose the offer that allows you the lowest interest rate, as well as a reasonable payment. Again, be sure that you can afford to make that payment every month by the date indicated.