Understanding and managing your credit doesn't have to be difficult, and it certainly doesn't have to be stressful.

What credit really is

Credit is the amount of trust a lender has in you to repay your debt. The more trust, the more credit.

Many lenders use credit reports and credit scores to determine how much credit to extend to you. Your credit report provides information on how you've paid your bills to other lenders. It also includes information on items like any tax liens, court judgments and bankruptcies.

It's important to understand that while the credit report might help a lender decide whether to extend credit to you or not - the lender makes the ultimate decision. Credit bureaus don't make credit decisions.

Your credit score

	A closely held secret by the credit bureaus is that your credit score is actually based on a number of factors, including:
	How you are paying your bills Your outstanding balances on your accounts How long your accounts have been open How often you've applied for credit Your debt-to-income ratio

Complex mathematical formulas are attached to all of the factors to produce your credit score. The information to produce the score is compiled from databases containing credit records of more than 170 million Americans.

The credit files are continually updated as information on your accounts is submitted by lenders. So, your credit score really can change from month-to-month depending on how you pay your bills.

Generally, accounts (both bad and good) remain on your credit report for seven to ten years.

Credit and you

The best way to ensure a good credit rating and receive credit when you need it, is to continue handling your credit responsibly. That means paying your bills on time, not pushing your balances to their credit limit, not applying for unnecessary credit cards and reviewing your credit report every six months for errors.

	Don't become a victim of credit fraud.
	Shred credit card applications you receive in the mail Monitor your credit report for any unusual activity