Good Credit Management

High school counselors are always referring to your permanent record: "That detention will go on your permanent record," or "Get caught cheating and it goes on your permanent record." Now that you've graduated from high school and are a functioning adult in the workforce, you think that you don't have a permanent record any longer. But you do-with regard to credit. Those vague threats were just a preview of how your credit actions are documented.

Your oh-so-important credit history

Three reporting agencies track your credit history: Equifax, Experian, and TransUnion. They each compile a credit report, which complies a list of your creditors, the amount of money you owe, your credit limits, and the frequency of your tardy payments. Late payments and other credit blemishes stay on your record for seven years. All of this information goes into the FICO calculation to determine your score.

Your report is accessed by companies who want to know how fiscally responsible you are. Lenders use the information to set your interest rates; a higher FICO score means better credit, which means lower rates. Imagine saving 0.5 percent off every loan you have during the course of your lifetime. The savings could be significant!

Other people might have their hands on your credit report too. Government agencies, landlords, insurance companies and even prospective employers are allowed to take a peek. As a result, a few late payments might be far more serious than that detention you earned for skipping gym class so many years ago.

Finding your credit report

The law requires that each reporting agency provide you with one free copy of your credit report each year. To access these free reports, visit http://annualcreditreport.com. You'll need to answer a few questions to verify your identity, but once you do, you can receive it either on the Internet or by mail.

Several online companies provide credit reporting services, which is not the same thing as your free credit report. Be leery of companies offering free trial memberships-you don't need to provide a credit card number or agree to a membership to see your credit report for free.

Keeping a clean history

Keeping your credit report unblemished involves controlling your spending and paying bills responsibly. Here are some common sense tips to keep you focused:

• Pay your bills on time.
• Pay off major purchases from the past before making more major purchases now and in the future.
• Avoid maxing out your accounts.
• Pay more than just the minimum payment on your cards each month.
• Don't accept every credit offer.
• Don't keep every credit card that you own in your wallet.
• Don't transfer balances repeatedly.

Whether you take advantage of credit's power or fall victim to her limitations, someone's always keeping track. Even though your high school record has long since gathered dust, your credit record lives on as long as you do.