Good credit is important in assessing your capability to handle financial situations, especially when you are transacting with other companies. It also factors into the transaction approval process.

It helps the managers of the company that you are transacting with to decide whether your proposal of doing business with them should be accepted or rejected. A good credit rating impacts their decision favorably.

* How do I start building a credit history?

One way to start building a credit history is to open a department store or gasoline charge account and pay the balance in full every month. That way you not only avoid finance charges but create a good credit rating for yourself.

In the United States it is very difficult to establish a credit history if you are not a legal U.S. citizen. However, you might try asking a close friend or family member to add you as a signer on their account or to co-sign a loan with you. That way the credit history accrues to both of you.

* What is a credit bureau?

A credit bureau is a company that compiles and distributes credit and personal data to the leading creditors in the state. This includes all the information that pertains to your accounts, such as the balance, the loans or charged amounts, and the mode of payment that you use. The credit bureau records whether you make your payments on time, sometimes pay late, habitually pay late, default on a loan, or take out bankruptcy.

* What is a credit report?

A credit report comes from one of the credit bureaus and is a legal document show your entire credit history, including your accounts with banks, credit unions, companies and creditors.

* How can I get a copy of my credit report?

You can contact your bank or other credit institution to obtain it a copy of your credit report. You will be asked for the following information, in order to verify your identity:

- Full name

- Address

- Date of birth

- Previous address

- Driver's license number

* How often should I check my credit report?

You should check your credit report every year or maybe even every six months. This will help protect you from identity theft and other types of fraud.

If you are planning to apply for a loan or if your wallet was lost or stolen, you should check your credit report again even if it has been less than a year since your last check.