Credit Scores - kcentv.com - KCEN HD - Waco, Temple, and Killeen

We've all heard about someone having "good" or "bad" credit, but who actually makes the decisions about a person's credit rating?

There are three major "credit bureaus" – Equifax, Experian, and TransUnion – that collect information about you and use it to build a credit file. This information is used to calculate a "credit score" that is an estimate of your "creditworthiness".

Having a good score is important because not only are they used when you apply for a loan, but employers, insurance companies, and other businesses use them as well.

What are some of the keys to obtaining a good credit rating?

Other than the obvious strategy of paying your bills on time, there are a few things to keep in mind:

Time. An older credit file will be more stable, so it's important to keep old, "good" accounts on your file even if you're not using them anymore.

Avoid Maxing Out Your Cards. The lower the percentage of available credit you're using the better your score will be.

Keep Inquiries to a Minimum. Frequently applying for credit can lower your score for up to 12 months for each inquiry.

What should someone do to learn more about their credit file and credit score?

Everyone is entitled to a free credit report once a year from each of the three credit bureaus, and you can go to www.annualcreditreport.com to get yours. If you decide to purchase your credit score along with the report, make sure you're purchasing a true FICO score since this is what most lenders use.

Remember that these topics are general in nature, so consult with your financial advisor about your specific situation before making any investment decisions.