Know the Law Before the Law Knows You

Credit is when you buy something and agree to pay for it on installments (over a set period of time). You can do this by purchasing something from a store or by using a credit card. Remember, "credit" does not mean "free."

• You have a job.
• You can pay the credit card balance every month.
• You can control your urge to charge.
  

• You should look at the yearly interest rate and confirm that the rate will not change.
• Does the credit card company charge an annual fee?
• Are there any additional fees attached to the credit card?

A credit rating or "credit worthiness" measures your ability to repay a debt. This can be established by a past record of completing payments or by showing a regular salary or other source of income. You can also get a good credit rating by maintaining a savings account, showing uninterrupted employment and using and paying credit cards on time.

You can ask businesses that furnish consumer credit reports to tell you what information they have on you. The consumer-reporting agency may charge a fee for providing you with a credit report. The three main reporting agencies are Experian (888-397-3742), TransUnion (808-888-4213), and Equifax (808-585-1111).
For a free credit report go to www.annualcreditreport.com.

It depends on the seriousness of the past problems and the amount and purpose for the new loan. Generally, credit-reporting agencies want references on loans and employment for the last 7 years. A past bad credit rating can sometimes be avoided if the collateral for the present loan is sufficient.

• Call your credit card company immediately and report the loss or theft.
• Send a letter confirming the phone call.
  
• For unauthorized charges made before you report the credit card lost or stolen you may owe up to $50; the losses could be greater the longer you go without reporting the credit card lost or stolen.