Congratulations! You're about to become one of 50 million Americans who have checked their free credit report. Managing your credit is easy once you know the basics of free credit reports and credit scores.

Credit Reports

Most Americans have credit reports at the 3 major credit reporting bureaus - TransUnion, Equifax and Experian. Each credit report is an overview of your credit history dating back years.

The credit reporting bureaus create these reports based on information provided by your creditors. Because the bureaus don't share information among themselves, your TransUnion, Equifax and Experian credit reports will all be slightly different. Lenders typically pull all three reports for the fullest picture. Your credit report lists information like:

• Name, social security number, spouse, address, and employer
• All credit accounts and creditor contact info
• All debt including credit cards, loans, mortgages and retail charge cards
• Outstanding balances
• High balances from the past
• Credit limits
• Payment history
• Any bankruptcies, legal judgments, default accounts or foreclosures
• Inquiries (list of those who have checked your credit in the last 2 years)

Every single time you borrow money or get credit, the prospective lender pulls your credit report to see what sort of risk you are. Your credit report may also be checked as part of a job interview, apartment rental or an insurance quote. As you can see, it's a very important document.

Credit Scores

Your personal credit score comes from the raw information in your credit report. TransUnion, Equifax and Experian use their own formulas to weigh factors in your report and give you a credit score. All three scores are known as FICO scores (FICO is just an acronym for the company that developed the scoring model). The higher FICO scores are the best, and you should aim for scores above 720. The credit score scale is 349 - 849. Your credit score is directly responsible for the interest rates and other loan terms you receive on credit. This can literally translate into thousands of dollars saved - or lost.

For example, here's what 3 different credit scores might pay for the same $200,000 home loan.

Credit Score:	550	650	750
Monthly Payment:	$1643	$1339	$1195
Savings:		$304	$448

Managing Your Credit Life

The number one thing you can do to maintain good credit is check your free credit report on a regular basis. A 2004 study by the U.S. Public Interest Research Group (PIRG) found that 79% of credit reports contain errors, and 25% have mistakes serious enough to cause consumers to be denied credit, loans, housing, or even jobs.

Check your credit reports frequently for errors. It's not hard to have errors removed and this can improve your credit score. The other big things you can do are pay on time, and pay down your credit balances.

Identity Theft

The second thing you can do to maintain good credit is protect yourself against fraud. The signs of fraud are easy to spot when you see your credit report. You might see credit accounts you don't recognize, late payments, even arrests or bankruptcies filed under your name.

Should you be the victim of fraud, have a "Fraud Alert" placed in your credit report to begin restoring your damaged credit. The fraud alert is free. ID fraud hits about 4% of the population. That's millions of people every year.

Credit Monitoring

This is the very latest tool to help people manage their credit easily, without a lot of effort. For a monthly fee, you receive unlimited, free access to your 3 credit reports and automatic emails any time there are changes. It's great for people who are:

• Actively working on improving their credit and credit scores
• Preparing for a loan
• Concerned about ID theft and fraud
• Just too busy to stay on top of their credit personally