A credit report is the sum of information gathered on your credit history by a Credit Reporting Agency. This information is then sold to credit grantors, such as banks, lenders and credit card companies.

Your credit report will include information such as:

• Your full name and/ or any aliases
• Your address, both present and past
• Your employer's name and address
• General information such as your Social Security Number, marital status, etc.
• Outstanding Debts and account status (ie: revolving, open, closed)
• Record of payments (ie: on time, 30/60/90 days late, missed)
• Public Record information such as any liens, or court judgements, against you

Certain types of information are not used for compiling a credit score such as race, color, national origin, religion, sex and marital status. Age may be used in other kinds of scoring, but not in the FICO score. Information such as where you live, interest rates, current debt obligations and child/family support obligations may be used but also not in the FICO score.

FICO is a credit score developed by Fair Isaac Corporation. It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. The three credit reporting agencies all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScore credit score.

Collected information is weighed by FICO software in approximately the following ratios:

PAYMENT HISTORY - 35%
Have you been making payments in a timely manner? Are you consistently making late, or slow, payments? Do you have charge-offs, collections, foreclosure, bankruptcy, suits, liens or repossessions?

AMOUNTS OWED - 30%
What is your total debt, including individual accounts, number of accounts, available credit? If your credit lines are at the max, it will have a negative impact on your score.

LENGTH OF CREDIT HISTORY - 15%
HOw long has the borrower had established credit? Insufficient, or a lack of credit history may have a negative impact. FICO will not calculate a score unless the borrower has had at least one account open for a minimum of six months and another that has been updated in the last six months.

NEW CREDIT - 10%
If you have too many recent inquiries, open accounts and the proportion to open accounts, this may indicate a cash flow problem. However, new credit, if indicating reestablishment of a positive credit history following a history that had problems will have a positive impact.

TYPES OF CREDIT USED - 10%
Too many credit card accounts, retail charge accounts, or loans from certain lenders can have a negative effect on your score.

These are just guidelines. Persons with newly established credit may have different criteria. Lenders may also use information from your loan application, such as your employment history or if you own a home.

FICO scores range from around 300 to 850. The median score of the population with established credit is 723. Only about 11% are above 800 while the largest group of 28% are in the 750-799 range. 13% are between 500-600 with only 1% below 500.

7 Common Mistakes That Can Lower Your Credit Score

• Paying bills late
• Not paying the minimum amount due
• Keeping debt levels too high
• Owning too many credit cards
• Not alerting current or potential creditors if you've moved or changed names
• Not periodically checking your credit
• Not using your full legal name in financial documents

6 Ways To Improve Your credit Score

• Pay your bills on time
• Keep your balances low in relation to your available credit
• Make more than the minimum payment
• Don't open a lot of new accounts over a short period of time, especially if you have a short credit history
• Pay off credit card debt rather than moving it around to other cards
• Review your credit report regularly and correct significant errors

Top 5 Credit Myths

• My score will drop if I check my credit
• Once I pay off a negative record, it will be removed from my report
• My poor score will be with me forever
• Paying off my debt will add 50 points to my credit score
• Closing old accounts will improve my score.

Source: www.whatsmyscore,org