As you may know, many retail and commercial organizations use your credit report information to evaluate your credit risk and to determine whether or not you are approved for credit and terms. There are three major credit reporting agencies: Equifax, Experian and TransUnion. Since your credit report has such high impact on credit decisions concerning you, it is important to understand the information contained in your credit report.

A typical credit report is divided in four sections:

1. Identifying information: (Name address, social security number, date of birth and employment information.)
2. Credit history: (Lists all loan account details you've had, your balances, your payment history and how long you've had that account.)
3. Public records: (Public information such as bankruptcies, lawsuits, liens and judgments.)
4. Credit inquiries: (This section lists all inquiries that have been made into your credit record, including pre-screened credit offer inquiries made by credit card companies and updates made by creditors. These inquiries are not counted in your credit score if you didn't request the card and didn't subsequently apply for the card.)

A Credit Score is derived from the information contained in the credit report. A common scoring formula introduced by the Fair Isaac Corporation is the FICO score. Credit scores can range from 375 to 900. Higher scores indicate "lower risk", an increased probability of being approved for credit and lower interest rates. A person with a high credit score is in a stronger position to negotiate a loan and its terms.

Some factors that can impact your credit score are:

1. Your history of making payments.
2. Longevity of your accounts
3. The amount of outstanding debt you owe.
4. How many accounts you have and the type of accounts.

Important information: as a result of the FACTA (Fair and Accurate Credit Transactions Act), it is important to note that all Americans have access to one FREE credit report annually from each of the three major credit reporting agencies. However, your credit SCORE is not FREE therefore you must request the "scoring option" and pay a minimal fee for your score.