A credit report is what drives the percentage rate on loans and credit cards you can obtain and can also affect your security clearance and your career. A credit report lists the activities of your credit (including loans and credit cards) and how your credit is used. It contains your current financial fitness on a specific date for all your reported credit.

What exactly is the credit game all about and how is it played? Today Coach Andi is going to give you the rules of the game to include the penalties that will set you back in the game of credit. Some players in the credit game include bank credit cards, department store charge cards, gas cards, installment loans for vehicles, mortgages, home equity loans, personal loans, and student loans. Typically, savings and checking accounts are not reported to credit bureaus; therefore, these assets are not allowed to suit up and will not take the field to help you make any big plays in the game.

The rules are easy. If you have never had any credit cards or loans your credit will be non-existent (a low score). If you have credit cards and⁄or loans and break the rules by not paying on time, or defaulting, then you are penalized and your score drops drastically. If your credit cards and loans are paid in a timely manner and your balances kept low your score continues to rise with no penalties as the game clock runs.

The game of credit is typically scored like this:

Thirty-five percent of your score is your payment history. Do you pay on time? Thirty percent of your score is the amount of money you owe in relation to your credit limit. Fifteen percent of your score is the length of time you have been in the game. Ten percent of your score is new credit --recently opened cards or new acquired loans. Another 10 percent of your score is the credit you use – the type of credit cards and loans you have or have had in the past.

This coach wants you to score as high as possible. Scores generally range from a low of 300 to a high of 850. If your score is under 620, you are considered a High Risk to lenders. Now, let me make it clear, I want to see you scoring over 720 on the big game day when you check your credit. A score of 720-850 can mean you will be offered the best interest rates available. It is possible to achieve this high score, you need to have the right ‘‘players” with the right percentage of money owed and, of course, each ‘‘player” must be paid in a timely manner (i.e. always pay your bills on time, every time).

Penalties in the game of credit can occur without you realizing it. When you recruit new ‘‘players” (cards and loans) your score can go down. Having too many players on the playing field can definitely cause you a penalty. Having too many NEW ‘‘players” can result in a huge penalty, so spread out new credit applications by at least six months. The best game plan I suggest is not having any more than two or three credit card players and not having any more than two or three loan players. The most negative situation a team can find themselves in is having players that are not paid or paid late. This really can cause your score to go down. It can take up to seven years for a score to recover from a default or collection penalty. Paying late on any card or loan will hurt your score dramatically. Once you get your team situated make sure you pay them on time so they can work hard for you and improve your score.

The last thing I want to talk about today in the game of credit is how much you play each of your players. It is best to use your players only occasionally. Having a balance on a credit card of over 50percent of your credit limit can lower your score.

The better you play the game of credit, the higher your score. The better you play, the lower your interest rates. It is a game that is confusing and complicated, but can really impact your life in so many ways financially.

If you don’t know how well you are playing the game of credit, I can help you with your game plan. The entire Financial Readiness Team here at your local ACS can help. Call for an appointment if you would like any further information, we are here to help. 703-696-3510.

(Wrenn is a financial readiness fellow in the Fort Myer Military Community Army Community Service Financial Readiness Program.)