Before heading out to purchase something big or major, such as a washer and dryer or automobile, an individual should check two reports, one is their credit report and the other is their credit score. Most people know of their credit reports but many individuals do not readily know about their credit scores which to some merchants and vendors is the more important report.

A credit score includes information regarding an individual’s credit history such as their bill paying record, number of credit cards they have and any outstanding debit. This gives a picture of weather or not an individual is worthy of credit. The system awards points to different factors in addition to helping predict how likely that individual is going to be to pay back a new debit. These points are added together to create a persons credit score.

Credit scores can not include certain characteristics even though they are complex, for example, a credit score does not include nation of origin, sex, race, marital status or religious preferences. While age could be considered a factor, the credit scoring system must give equal treatment to elderly applicants, however a credit score does include information from a credit application such as employment and if you rent or own your own home.

Better credit scores are in the higher numbers, 800 is the highest and 300 is the lowest, an individual with a credit score of 700-something would be considered a good credit risk while someone with a credit score below 600 would have trouble qualifying for credit.

To obtain a higher credit score, pay your bills on time because a payment history of bills accounts for 35 percent of your total credit score and late payments will negatively affect your credit score. To help people with making their monthly payments on time, many companies have introduced automatic bill paying so that an individual is never late with a payment; it is automatically deducted from their bank account every month.

Pay off as much debit as you can afford too, the more debits you can pay off the better your credit score will look to potential creditors.

Many people overlook their credit reports and should check them at least twice a year for wrong information or identity theft. An individual’s credit report contains information on their loans, credit cards and other types of loans including when they opened the loans and their payment history. Credit bureaus gather information from many different sources and can make mistakes which could cost an individual a loan they desperately need such as one for a microwave for cooking or a cell phone for communicating with family members.

An individual could call and request a copy of their credit report, which they would receive free if they have been turned down for a loan, otherwise it cost between $8-14 and there is a form enclosed with the report to record any corrections. The credit bureaus have 30 days to investigate and then correct the bad information.