Hi friends, welcome back to another episode of the Money Girl Podcast.

I'm Laura Adams. Just about every aspect of personal finance can be confusing. But if I had to pick one that seems to leave people scratching their heads the most, it would be credit.

There are some common misunderstandings about what happens to credit scores when you apply

for new credit, or have an existing credit limit changed.

In this episode I'll clear up any confusion by answering reader questions and tell you what

you need to know to maintain excellent credit for life.

If you're a regular money girl reader or podcast listener,

I bet you already know a lot about credit.

But if you're new to the subject, here's a quick

primer. Your credit report is a history of your credit accounts and payment

activity. It also includes your basic personal information and certain types of public data, like whether

you've declared bankruptcy or are involved in a lawsuit.

You're legally entitled to a copy of your credit report from each of the three nationwide credit

agencies once a year at annual credit report.com.

Although your credit report is full of information that you should review for accuracy at least every 12 months.

It doesn't include your credit score.

Your credit score is a rating that quantifies the potential risk you pose to a lender or merchant.

The higher your score, the less risky you appear.

There are hundreds of different credit scoring models in use today,

each with its own scale and mathematical formula.

A variety of companies, including the credit agencies, sell credit scores to consumers,

lenders and merchants.

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