Credit is an important cornerstone of a healthy financial portfolio. Along with your savings and investments, a good credit score is a vital resource to help you get ahead. Having good credit can help you find the best deals on credit cards, loans, bank accounts, utility accounts, and insurance. In this article, we're covering the most important things you need to know about credit.

The Credit Bureaus - The three national credit bureaus - Equifax, Experian and TransUnion - each collect consumer information from a vast network of creditors, banks, lenders, and public record sources. Not every business chooses to report to the bureaus and they aren't required to by law. The data collected by the bureaus is then resold to businesses trying to evaluate a customer's risk. The bureaus don't share data with each other; so your three credit reports can each contain different information.

Credit Reports - Credit reports are a record of your financial behavior over the past seven or more years. Credit reports contain your name, address, employer, credit card and loan account payment history, debt balances, public records, and recent applications for credit. Your income, age, gender, race, net worth, and checking account information are not listed on your credit report. Credit report records are updated each time the credit bureau receives new data from its network. Old negative data - such as collection accounts, liens, or repossessions - each have a set expiration date under the Fair Credit Reporting Act law, usually seven to ten years. Checking your own credit data doesn't hurt your credit scores.

Credit Scores - Credit scores were developed to help businesses filter complex credit report data into one easy-to-evaluate three-digit number. Most credit scores use a range from 300 to 850, with a score higher than 720 considered "good." Your credit score is based on your payment history, debt balances, length of time using credit, mix of account types, and recent applications for new credit. A good credit score can help you get the best rates and deals on a wide variety of accounts.

Having the Best Credit - For an excellent credit score, you should have a spotless record of on-time credit card and loan payments for over seven years. But that's not all that it takes to have a good score. You also should keep your credit card debt balances low compared to your credit limits; keep old accounts open for as long as possible; have a mix of credit and loan accounts; and avoid unnecessary applications for new credit. Using credit responsibly for a long period of time is the recipe for good credit.

Now you know the basics about credit reports and credit scores! It doesn't take much effort to have good credit and to have access to the financial rewards that come with that important part of your financial portfolio.

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