Establishing and Managing Credit

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What is a credit report?

A credit report is a document from a credit reporting company that provides detailed information about where you live, how you pay your bills, if you have a judgment filed against you, and if you have filed for bankruptcy. Based on your history related to this information, the credit company will calculate a “credit score” that reflects your likelihood to pay back a loan.

Why is my credit report important?

Lenders, employers, insurers, and other businesses purchase credit reports to evaluate your applications for loans, employment, insurance, or renting. Because your credit report plays a major role in many life events, it is important to take steps to get and keep a good credit score.

What is a good credit score?

If your credit score is 700 or higher, your score is considered “good.” Credit scores are categorized into the following groups:
Very Poor – 300- 549
Poor – 550-649
Fair – 650-699
Good – 700-749
Excellent – 750-850

Tips to Get and Keep a Good Credit Score

  • Pay your bills on time - every time.
  • Don’t just pay the minimum amount if you can afford to pay more (this is especially true with credit cards!)
  • Don’t get close to your credit limit.
  • Don’t apply for a lot of new credit in a short time (like store credit cards to get a discount).
  • When car shopping, don’t allow them to run a credit check until you’re pretty sure where you want to buy.
  • Check your credit report once a year.
  • Dispute any errors on your credit report.
  • Communicate – if you are having trouble making your payments, talk to your creditors to see if you can work something out, even if it’s only temporary.

Do I need debt to establish credit?

No. While paying loan and credit card payments on time can help you establish credit, it is not necessary to hold a balance on your credit card or take out a small loan in order to establish credit.

Here are some tips to help you build credit without going into debt:

  1. Put your phone, electric, and other bills in your name and pay them timely each month.
  2. Open a credit card, use it only for your needs (groceries, gas, etc. - not wants) and pay it off each month.
  3. If you are not eligible for a traditional credit card, open a secured credit card. Secured cards work like any other credit cards, except they require a security deposit which will help as collateral for your account. To help you build a credit history, your payment and usage behavior is reported to the three major credit bureaus.
  4. Get to know a banker. Loan officers are very experienced with credit requirements and scams so establishing a relationship prior to a need or crisis can be very helpful.

How do I improve my credit score?

Many people face a financial crisis at some point in their lives. If you have trouble making ends meet, contact your creditors immediately. If you end up with a bad credit score, it may take time, but if you’re diligent, you can take steps to raise your credit score:

  1. Research and settle collection accounts that have been reported to the collection agencies. Medical bills are often the culprit here. Contact the institution you owe money to and request a modified payment plan that fits your budget. Most hospitals will allow you to make payments without charging interest if you pay consistently.
  2. If there are errors on your credit report, follow the steps below to dispute those errors.
  3. Once you’ve settled any collection accounts, open a secured credit card and follow the other tips to get and keep a good credit score above.

How do I check my credit report?

To ensure accuracy and protect against identity theft, it is important to check your credit report at least once a year. You are entitled to a free copy of your credit report from each of the three nationwide credit reporting companies (Equifax, Experian, and TransUnion) once a year. To order, you can visit or call 1-877-322-8228. You may order reports from all 3 companies at once, or you can order from just 1 and check the other reports throughout the year.

Tip: Pick a day each year to pull your credit report. Some dates that may be easy to remember, but not a busy time of year: April Fools (don’t get fooled with errors on your credit report!) and Columbus Day.

How do I report and dispute errors on my credit report?

As you review your credit report, if you find something wrong, you should contact the credit reporting company and the creditor that provided the information to the credit reporting company. Tell them what you think is wrong and why and include copies (no originals) of any documents that support your position. It may also be helpful to include a copy of your report with the items in question highlighted or noted. A sample dispute letter can be found at Be sure to keep copies of your dispute letter and enclosures.

Here’s a real-life example of a credit report error:

Sally paid off her car loan early (way to go Sally!). Her payment on the balance was submitted in March, but her credit report with Experian shows that she missed her April and May payments and doesn’t reflect that she paid the loan off. Sally received the title for her car after she paid it off in March, so she writes to Experian and the car loan company (the creditor), identifies the error, and includes copies of the car title and cleared check that was submitted in March.