A. Step one is to apply for credit. When you applied for your first credit or charge card, car loan, or utility, you filled out an application. The credit issuer called one of the country's three big credit bureaus -- TransUnion, Equifax or Experian – and, recognizing they didn't have any information on you, started a credit file for you. The other two bureaus learned about you shortly thereafter. And now, as you pay the bills on that credit or charge card or loan, your creditor sends details on you to the bureaus, telling them whether you pay on time (or don't), how much your credit limit is and whether you stay within your credit limits. That's all it takes. Each time you pay a bill or apply for credit elsewhere, that report grows thicker. And although some information will eventually fall off the report (generally seven years down the road) much of it will follow you around for as long as you have and manage credit.

A. Fair Isaac & Co., which calculates the FICO score, has criteria that credit reports must meet before they're deemed "scoreable." You have to have one account – a student loan, credit card, mortgage, auto loan – that is older than six months and one account has been updated within the past six months (they can be separate accounts – so you can have a credit card that is ten years old but never used, and an auto loan that you're currently paying off and still qualify). So you likely had a credit score about six months into your life as a borrower, when there was enough information in your file for the credit bureaus to assign you a score.

This credit score is a numerical translation of your credit report that future lenders (as well as insurers, employers, landlords and others) will use to make decisions about whether they want to do business with you – and, in some cases, how much to charge you, as well. Now, every time new information appears on your credit report your credit score adjusts.

You should also understand that you don't just have one credit score. You have many. There are two reasons for this. First, every creditor does not report information to each of the three big credit bureaus. Some do. But some of the smaller ones (utilities, for example) may only report to a single bureau. And each of the bureaus computes a score based only on the information in its proprietary report. For that reason, your score from one bureau might be higher or lower than at the other two. Second, scores are tabulated using different formulas for different purposes. An auto lender is going to want to see your "auto score" which puts more weight on how well you've done paying car loan bills in the past, for instance. An insurance company is going to want to see your "insurance score" which was built specifically to clue homeowners and auto insurers in to how many claims you were likely to file.

A. No. A debit card (and the checking account it belongs to) won't show up on your credit file. This is true even if you process transactions at the register as a credit rather than a PIN purchase. If you want to build your credit history, you need a credit or charge card, a loan, or other account that reports to the credit bureaus, like a utility.

A. It's a credit history that contains very little information – typically three accounts or fewer. These accounts aren't just credit cards, but car loans, personal loans, student loans, etc. In some cases people with thin files may be denied credit because there isn't enough there for a lender to base a decision on. What can you do about it? Apply for additional credit. Wait, you're saying, I already did that, and was declined because of my thin file. But you have to apply for the right credit. If you're young, or married, you can ask your spouse or parents if you can be added as an authorized user on one of their credit card accounts (note that this is only a good idea if they are responsible users of credit). As they use that card and pay on time, your score will improve along with theirs. If that isn't an option, consider a secured card, which works much like a credit card but allows you to deposit a sum of money that then functions as your credit limit. Choose one that will convert to a regular old credit card after 18 or 24 months of on-time payments. Or look for a credit or charge card that caters to consumers with credit scores that are on the lower end of the spectrum. The interest rate will be higher, but if you pay off your balance every month, that won't matter. Finally, understand it generally takes a few months for each added credit account to show up in your score.

A. Credit scores look a lot like SAT scores, typically ranging from 300 to 850. I say typically, because that's the scoring range for the FICO score, which is the score on which most lending decisions are based. There are other scores with other scales. The Vantage score, for instance, goes from 501 to 990 and gives you a letter grade A to F like you'd get on a report card. Here's the deal: Higher is better. But as a point of reference, the median credit score in the country is about 711.

A. It's really a matter of doing just five things habitually.

1. Pay your bills on time, every time.

2. Keep the balances on your credit cards (and other types of revolving credit) as low as possible. High balances will reduce your score.

3. Don't close old credit or charge cards (particularly the ones you've had the longest), as doing so will reduce the amount of credit you have available - your credit limits - which can take down your score. Part of your credit score is your utilization ratio, which is the amount of credit you have available compared to the amount of debt you're carrying. This is one reason why you want to keep your balances low. You want to keep your utilization ratio to under 10%. The measure takes both individual cards and an aggregate of all cards into consideration, which means you can't just spread your debt among cards. If you have a total of $20,000 in credit available based on all of your cards' credit limits, and you're carrying $2,000 in debt, you're in that sweet spot. Close one card with a $5,000 limit, and all of a sudden, your utilization ratio jumps to 25%.

4. Try to establish a mix of credit – not just credit and charge cards, but utilities, car loans and mortgages (that you can afford, of course).

5. Don't apply for credit you don't need.
   
   

A. There are two ways. First, familiarize yourself with annualcreditreport.com. This site was established by the three big credit bureaus (under the orders of the government) to provide you with one free copy of your credit report from each bureau every year. I suggest pulling one report every four months from rotating bureaus. Looking it over is a great way to make sure that all the information is not only accurate but that it belongs to you. Information that seems to belong to someone else is a sign of identity theft (more on this momentarily).

Second, you should also know what your credit score is. If you are not applying for a mortgage or car loan in the next six months, you can pull a free score from several sites on the Internet. These will likely not be FICO scores, however. If you are applying for a mortgage or car loan in the next six months, it is important for you to see the same score that your lender is looking at. In most cases, to get that you will have to pay for it (which you can do at myfico.com). However, if you are turned down for credit or not given the best interest rate available, a recent change in the law mandates the score used to make that decision must be shared with you – for free.

A: That's a bit of a personal decision, but I generally believe you should have two. Before I explain, however, let's talk about the difference between the two. A charge card doesn't allow you to revolve a balance. It must be paid off in full in about 30 days. A credit card allows you to pay off your balance over time. For every month that you don't pay off your balance in full, you'll be charged interest. Now, as for those two cards, the first should be a credit card with a low rate of interest in case you need to buy something that you will pay off over time. The second can be a credit or charge card that gives you something back for using it – a reward like frequent flyer miles or cashback. You should pay the rewards card off every month and for that reason, should lump as much of your spending on this card as possible to maximize the rewards you're able to earn. If you have a business, you may want a separate card for accounting purposes. (And note: You'll want to try to manage the limits on those cards so that you're only using 10% to 30% of the credit available to you at any time.)

A: This too is such a personal decision. Rewards cards tend to be a little more expensive than those without rewards in terms of annual fees, so the first hurdle to clear is to make sure you're earning enough back in rewards to cover the cost of the card. The next question is what sort of rewards will you actually use? Frequent flyer miles are great for travelers, of course, but you may also be able to use them to pay for gift cards, merchandise at particular stores or tickets to events. You can also opt for a card that gives you actual cash back. There are even cards that will now deposit your rewards in retirement accounts or college savings accounts for your kids. The point is to know what you'll be getting – and that you'll actually use it – before you apply for a particular card. These perks have real value, so you don't want to waste them.

A. It's a question you get asked at every cash register: Credit or debit? What you should pull out of your wallet depends on a few factors. Remember, a debit card pulls money out of your checking account immediately (or almost so) and charge card must be paid off at the end of the billing cycle. Only the credit card gives you the option to pay off your balance over time. This can be helpful if you're talking about a large purchase that you can't afford to pay for over a single month. But it can also be expensive because you'll be paying interest for every month you carry that balance. With those factors in mind, I'd break it down like this. If you can pay the balance off – use whatever card gives you the biggest rewards and the most in the way of consumer protections. If you can't pay the balance off – consider whether you need to make the purchase now at all. If the answer is yes, use the credit card in your wallet that has the lowest interest rate. Finally, if you can pay the balance off but you haven't used your credit cards in a while, consider using them for a small purchase once a month and paying that balance off. This will help you build a credit history and keep the one you have in good shape.

A: Let's go over the differences. There are actually three ways for couples to have credit and charge cards.

1. Individual cards (marked by an "I" on your credit report): In your name only. You are responsible for paying the bills (unless you live in a community property state – in that case, a spouse may also be liable, regardless of whether he or she is listed on the account). Payment history and other usage information are reported only on your credit report.

2. Joint cards (marked with a "J"): In both names. You are both responsible for paying the bills. If one of you is not able to pay, the other person can be liable for 100%. Payment history and other usage information are reported on both persons credit reports.

3. Primary cardholder with authorized user(s) (marked with an "A" if you're the authorized user): Primary cardholder is responsible for paying the bills. Payment history and usage information is reported on the credit reports of both the primary cardholder and authorized user(s).
    

Note: Reporting to credit bureaus is completely voluntary. These are general rules of thumb, but some creditors may have a policy of not reporting authorized users. If you're concerned about this, double check with your card issuer.

Every person needs to establish credit - that much is clear. The problem with all of that credit being joint is that one person has the ability to run up debts that the couple isn't able to support – and take down the credit scores of both spouses as a result. The problem with maintaining only separate cards is that each of those cards may come with an individual annual fee. Thus, credit for the household may be more expensive than necessary. A better solution may be for you to be the primary cardholder (and your spouse an authorized user) on one card and your spouse the primary cardholder (with you an authorized user) on another. That way you have just two annual fees. But because you have responsibility for paying one account and your spouse responsibility for another, you aren't putting your credit scores in each other's hands.

A: In some cases, yes. If after you marry, one spouse has substantially better credit than the other, applying for credit in that person's name alone is going to cost you – as a family – less. In order to get that loan or credit, the spouse applying is going to have to earn enough money on his or her own to qualify. But as long as you can clear that hurdle, it can be a very wise choice. Concurrently, the spouse with the not-so-good credit should be working at improving his or her credit score. As long as bills are paid on time and more money is paid off than borrowed, that person's score should move in the right direction.

A: Just as you merged all or part of your financial lives when you got married, when you get divorced you have to separate them. Joint accounts should be closed. Before you do that, however, make sure that you have at least one credit or charge card in your own name. (See "Should my spouse or partner and I have joint or separate cards?" above.)

A: Under the CARD Act, your child can't get a card in his or her own name until age 21 unless he or she is able to show enough income to support carrying the card or has a co-signer. That said, you may not want to send a child off to college – or out into the world – without this sort of a safety net. In that case, consider adding your child to your account as an authorized user, sometimes called a supplemental card holder. (This is how I will build credit for my own children.) Authorized users get a card of their own, in their own name and in most cases the history of payments gets reported to the credit bureaus on their behalf (so it helps build credit). In some cases they also receive cardholder benefits like purchase protection, roadside assistance, extended warranty protection and baggage insurance. You may be able to set a separate spending limit just for that supplemental card (which helps alleviate a parent's worry that their child will overspend.) In all of these cases, read the fine print on your card agreement to be sure you understand what you're getting. What they may not have is the sole responsibility for making payments. Be sure you understand how the bills are meant to be paid and if your child is responsible for paying you so that you can in turn pay your bill, set up a monthly system to get them in the habit of meeting payment deadlines.

A. You should immediately go through the process of disputing the information by filing a report with each of the three credit bureaus. Their contact information is as follows:

Equifax	1-800-525-6285	www.equifax.com
Experian	1-888-397-3742	www.experian.com
TransUnion	1-800-680-7289	www.transunion.com

A. Concern about identity theft is one reason that it is very important to check your credit report regularly. Noticing that someone has stolen your identity is key to fixing the problem. But even if you don't see anything wrong in your report, if you are aware that some of your data has been stolen, step one is to attach a fraud alert to your credit file. A fraud alert sends a signal to any creditor who pulls your file in an attempt to issue new credit; they are then supposed to contact you – typically by phone – to make sure you are actually the one who has applied for credit. Note: Initial fraud alerts only last 90 days. And they only require creditors to use "reasonable policies and procedures" to verify your identity before issuing credit in your name. If that doesn't sound strong enough, you may want an extended fraud alert (which is permanent, but requires proof – generally in the form of a valid police report - that you've been a victim of id theft) or a credit freeze instead.

A credit freeze blocks creditors from gaining access to your report at all. Like the name implies, you're putting your information in a block of ice, making it unlikely that a thief will be able to open new accounts in your name. The rules for this service vary by state; in most, freezes are free of charge if you've been a victim of fraud. If you're not a victim, you'll generally have to pay - around $10 for each freeze at each credit-reporting bureau (you need to freeze your report at all three; otherwise, there's no point). But understand that if you apply for credit, you'll need to unfreeze your reports before you apply (which could cost another $10) and refreeze again afterward (possibly $10 again.)