If you are a little confused about your credit report and credit score there are a few things you should know to help you understand them better. TO begin there are three major credit reporting agencies in the U.S. and several smaller, localized ones. Each of the three major bureaus has different reporting habits and your score will vary from one to the other. Items that are reported, or not reported, will also differ on each one. This is why it is so important that you check each report for inaccuracies.

Your credit score is based on several factors. One third of your report will be based on your payment history alone. Late payments, non payments and credit collection agencies dramatically reduce your score in this area. One third of your report will be based on your debt to available credit ratio. If you have 5 credit cards that are maxed to the limit you will have a lower score than someone with two cards that have only a few hundred charged on them. Credit bureaus assume that someone who charges up to their limit is a higher credit risk.

The last third of your report is based on several small factors. Home ownership will give you a higher score than renting and if you have several previous addresses this will count against you also. Requests for credit reflect in this area as well as payments on secured credit or medical bills.

Every financial transaction you make will have a direct effect on your credit score - good or bad. That is why it is so important to review your credit report once, preferably twice, a year for mistakes or inaccurate reporting. With this in mind, check your report often, pay your bills on time and keep your charges below the limit and you should have no problems with your credit report or score.