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One of the most important things you can do to ensure that you have good credit is to check your credit report, to make sure no one has stolen your identity or allowed incorrect information to show up on your report. Your credit report and score are much more important than you might think - your credit may be checked while applying for a new apartment, starting a new job, or when you are ready to buy your first house or car. The better your report, the better your score, which will allow you to get the best rates on loans and altogether make your life easier.

What is your credit report?

Your credit report is essentially a compilation of your credit history, including such things as all the credit you have applied for, money you owe, and bills you haven't paid. The information is compiled from information supplied by banks, various merchants, and any other creditors. The FTC (Federal Trade Commission) is the government agency who has forced the credit agencies to set everything up so that consumers can check their credit reports for free. The bottom line is that everything is now golden, and consumers need to take advantage of this opportunity to make sure their credit is correctly being reported. The website that has been setup is called www.annualcreditreport.com, and it is the ONLY site that you can use to get the report for free. You'll see ads on television for freecreditreport.com and a few others, but they don't offer completely free services (free credit report tries to get you to sign up for their credit monitoring service (which costs money) before they give you access to your free report).
Who manages your credit report?

The three major credit agencies are Equifax, Experian, and TransUnion, and they are sponsors of annualcreditreport.com. They have information on millions of Americans, and have great impact on many different aspects of your life (Nervous? I would be). You are allowed to obtain your free report once every 12 months from each of the agencies. What I do is stagger my free report orders, so that every four months I rotate between the agencies. For instance, I'll order my free report from Equifax in January, Experian in May, and TransUnion in September. This way you'll have more chances of picking up a mistake or a case of identity theft. If you have an aversion to ordering using your computer, you can call a toll free number to order the report, 1-877-322-8228.

Your credit score

The last thing to understand is the difference between your credit report and your credit score. Your credit report is freely available, but your credit score will cost you about $8. The report is a listing of outstanding debt, credit taken, and bills while the score takes all that information and uses a complicated formula to come up with one specific score. Most people's scores are in the 500-800 range. Obviously the higher your score, the better rate you're going to get on a loan and the more credit-worthy potential landlords will view you.

Ordering your credit report has been made easy, and it's something everyone should do regularly. I hope this post has helped make clear what can sometimes be a complicated subject. Order your report today, and be sure to recognize any errors or attempts to steal your identity as quickly as possible. To clear those up you'll have to call the agencies directly and inform them of the error - that's a long process, which is why you should be checking your credit report regularly so you can begin to fix things right away if necessary.

Learn more about this author, Jon Menaster.
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