Credit report: A credit report contains all your financial and credit related activities. These activities include your payment history, types of credits you have used, the amount you owe (all the debts including loans, mortgages etc), new credit, length of credit history, inquiries and collections. This report is prepared by the three major credit reporting bureaus. There fore it is not necessary that all the three credit reports will contain the same data.



Credit score: Credit score is a number ranging from 350 to 850 that is calculated based on your credit activities. Good credit activities like timely payments give you a good creditworthiness and contribute to the credit score. Credit score is used by lenders to evaluate your credit worthiness. It can be said that credit score is a number that gives a measure of the person's credit worthiness.

Having a bad credit score can hurt you in many ways. With a bad credit score you might be paying high interests and might not even qualify for loans. The credit score is affected by all the activities in your credit report. Inquiries, collections and bankruptcies go down in the credit report as a major negative thus lowering your credit score.

Identity theft: When a person gains access to your credit card details like the PIN or the SSN, it is called identity theft. A person can use your credit card and can substantially ruin your financial life. Many believe that America is being swept by this crime wave. To save yourself from identity theft, it is required that you check your credit report at regular intervals and report to the bureaus immediately in case of a mistake. You need to file a complaint with the Federal Trade Commission if you are a victim.

Credit bureaus: Every American citizen's credit report is saved in the computers as a data base in the credit bureau. Credit bureaus keep a track of all your credit activities. There are three major credit bureaus in America, Equifax, based in Atlanta, Georgia; Experian, based in Allen, Texas; and TransUnion, based in Springfield, Pennsylvania. In case of any mistakes in the credit report, one must write to the credit bureaus and dispute the wrong information otherwise it can harm your credit score.

These are the four main terms used in the credit world. Every person who wishes to manage his finances well should have a thorough knowledge of the above terms. A proper knowledge of these terms helps you take proper decisions while managing your credit.