Credit reports are used by lenders to determine if an applicant for credit with their institution is credit worthy. They use these reports to make a decision whether or not to lend money to a particular individual based on a raw score of their overall credit rating. The bureaus that monitor individual credit have a complex system of scoring, and this score is based on what is contained in your credit reports.

If you have good credit you can expect to obtain prime lending interest rates and lower down payments. If your credit is bad, you can expect to pay higher rates of interest and may find it difficult to obtain credit at all. Making sure that you use credit responsibly is the key. Do not take out any more loans or apply for more credit cards than you need. One or two major credit cards will suffice and serve the purpose of helping you to establish and maintain a positive credit rating.

Too much credit on your credit reports can be detrimental to your overall financial health and picture. Lenders will look at how much credit you have and assess your debt to income ratio. If you have more credit than you can afford to pay for, lenders will see you as too big of a risk and will not loan you any more money.

Monitoring your credit reports is important in this age of identity theft. There are many credit monitoring services offered online and they usually come at reasonable monthly rates. Check your credit often for any discrepancies and act accordingly when you do find them.