When you get into the world of credit, it is important that you know what a credit score is, who calculates it and from what information it is from. This three digit number could either make or break your next financial transaction. This is because the score tells the creditors, banks and other establishments whether you can be trusted to pay bills and dues or not.

One of the things you should not forget is that the credit score is calculated based on certain information found in your credit report. As much as it is important to build good credit and improve your credit score, it is imperative that you keep your credit report clean. There are generally three agencies that create credit reports for consumers. What they do is to gather most if not all the information about your credit behavior and wrap them up in a single document which is reviewed by creditors.

So before you can get your hands into improving or increasing your credit score, it will be of help to know what things you should keep your credit report clean from. By all possible and legal means, avoid committing actions that would place the following on your credit report:

Charge-offs

This is almost like delinquency accounts but is much worse than just late payments. When you miss your payments for six months or more, the creditors will place your account under the "uncollectible" category. This implies that for the longest time your creditors have waited for you to pay your dues, they are already done waiting, and finally give up. They file a "charge-off" on your account which is then included on your credit report. This is like a warning sign for those who request for your report that you are not a very good payer. This "identity" stays with you and on your report for seven years.

Debt collections

The other thing that you should not look forwards seeing when you get your free annual credit report from each of the reporting bureaus are files of debt collection. This usually goes hand in hand with the previous entry. This means that since the creditors have given up waiting for you to pay your dues, they have transferred you account to the hands of collectors. This action is also recorded on your credit report. Updating your credit report under debt collection is really up to the creditors or the collector.

Bankruptcy

If the updates on the two previous entries are on the hands of the people you owe and the collectors, filing bankruptcy is done by you. This means that you already have no financial means to pay some or even all your debts. In your credit report, each of the accounts you included in your bankruptcy declaration is included. These stay on your credit report for seven to ten years. However, you can begin rebuilding your bad credit as soon as you have paid for all your debts.

Foreclosure

Another thing you should avoid being included on your credit report is a foreclosure. A foreclosure happens when you default on your mortgage loan and the lender takes your home to auction it off to recover the amount of mortgage. This severely damages your credit report which pose difficulties the next time you apply for a loan.