Creditors have long been using the credit scoring system to determine whether to extend credit privileges to consumers because it treats all consumers objectively. This means that is uses real data and therefore is more reliable than any subjective method.

This information includes such things as your mortgage details, car loans, and credit cards. The credit bureaus, who compile this information, also collect your experience with these accounts paying particular attention to the following details:

1. Balance
2. Limit
3. Payment History
4. Payments Timeliness
5. Collection Actions
6. Length of Account

Use a statistical equation, the credit bureaus use this information as factors in assigning you a credit score. Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like -- race, sex, marital status, national origin, or religion -- as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants. Normally, the credit bureaus charge $9.00 to give you a copy of your credit report. To get a copy of your credit report, click here.

Each credit bureau varies in the way that they report your information. For example, one bureau may place a judgement for child support while another may not include that, but will include your monthly salary. Each report should be reviewed along with the accompanying literature. The accompanying literature is defined as the information the credit bureau provides to you to help you understand the report. To get a free copy of your credit report, click here.

Typically, this literature will provide examples and answer a few commonly asked questions. Experian's report is probably the easiest to decipher. They include a fact sheet and additional information in regards to the type of each charge. By starting with this report, you can become knowledgeable in what type and which transactions belong in your file, and what items they should appear under. Once you become familiar with the Experian report, it should be less difficult for you to read through the reports of the other two bureaus. Beware, both Equifax and Trans Union routinely use abbreviations, which may or may not be obvious. For instance, "I" in used for an installment account, like a loan or "J" is used for a joint account. Typically, the bureaus include an example to coincide with your report. They also usually provide a glossary of abbreviations. It is important that you study these to become familiar with their notations.

Remember: the credit bureaus do make mistakes, so be sure to read all 3 reports and dispute any errors. For a free manual on how to read, decipher, and correct your credit repair, download our free credit repair kit.