For most young adults, credit is an abstract concept. How exactly can a number help the electric company decide if I need to pay a deposit? How can a single report help banks, car dealerships, and credit card companies decide whether they’re going to loan me money?

Put simply, your credit report is an overview of your debt accounts (or lack thereof) and how you’ve paid them. According to Credit Karma, a credit report focuses on five areas. From most to least important, these factors are

  1. Payment history – Have you paid on time?
  2. Credit usage – How much of your available credit are you using?
  3. Length of credit history – How long have you had credit?
  4. Credit mix and types – Do you have a variety of accounts?  
  5. Recent credit – How many hard inquiries have you had recently?

Your credit score is a numerical assessment of these factors. Scores range from 300 to 850. Different lenders evaluated scores in different ways, but here are the general guidelines:

Poor300 – mid 600s
Fair to GoodMid 600s – mid 700s
Very Good to Excellent       Mid 700s – 850

Credit Resources

Glossary of Credit Terms

How to Build Credit

How to Build Good Credit: A Beginner’s Guide

A Beginner’s Guide to Improving Your Credit Score

Adulting 101: Credit (For Beginners)

7 Strategies Every Beginner Should Use When Building Credit