Understanding how to read your credit report is one thing, but do you know how your credit score is calculated before it gets put onto your report? What about how to establish good credit for yourself? Watch our Personal Finance 120 video to learn more!

Transcription: Hi, I'm Carly Cherry and welcome to personal finance 120: information for managing your financial life in less than two minutes. Today, we're going to be discussing your credit score and behaviors that affect your credit. Your credit score can play a huge part in deciding whether you're approved for a loan, credit card, or mortgage, and if you are, what interest rate you will be charged. The components that make up your score include: payment history, amounts owed, length of credit history, new credit, and types of credit used. there are several things that you do in your day-to-day financial life, positive or negative, that can affect the points you earn in each category. Positive behaviors that will help you improve your score include paying your bills on time, this is an excellent way to maximize your score and prove to creditors that you're not a significant risk. Another great way to make sure your score is at its best is to monitor your credit history for errors and get them resolved immediately. With identity theft on the rise, it's a good idea to review your reports more than just once a year. Negative behaviors tend to be things you do without thinking about their impact on your score. Have you ever quickly responded to a credit card offer you received in the mail? Have you immediately said yes when your favorite department store asked you to send it for their credit card? As tempting as the rewards might sound, you have to be careful. Opening up to many new accounts can be damaging because your credit score is actually reduced with each new account you opened. Thirty percent of your score has to do with the amounts you owe. Make sure the total of your credit balance is less than twenty-five percent of your total credit limits. If your percentage is higher than that, make a point of paying down your balances for a few months. A little discipline can help you improve your score quite a bit. That’s all we have for today on your credit score. Remember to be conscious about your money choices and do your best to keep your accounts in good standing. You don't want your mortgage or loan application to be denied because of a few mistakes that might have been easily avoided. For more detailed information about this topic, be sure to visit our website: cambridgecredit.org. Also, don't forget to check us out on social media for more videos, articles, and tips we'll help you with your financial needs until next time I'm Carly Cherry for Cambridge Credit Counseling.