It is important to check your credit score and credit report.

The best way to get good credit is to avoid making mistakes in the first place.

Mistakes such as acquiring too many credit cards, failure to pay bills on time, and maxing out your credit cards all hurt your credit score and can make it harder for you to get approved for loans at good rates. However, sometimes you have already passed that point and hurt your credit. In this case, it is important to work to improve your credit score and fix your credit.

First, get a free copy of your credit report.

It is important to check your credit score and credit report, especially before you make a major purchase like a new home. Every year you can to go to www.annualcreditreport.com to obtain a free credit report from one of the big three nationwide consumer credit reporting companies: Equifax, Experian, and TransUnion. This credit report will provide you with all of the information that a consumer reporting agency will have in your credit file (but you wont get your credit score, just your credit report) . In addition you will receive a list of those who have requested your credit file (credit card companies, banks, employers, and so on).

You can also take advantage of several services that will give you all three credit reports and your credit score for free . There are several to choose from, including ConsumerDirect, MyFICO.com, and Equifax.

Understanding what’s in your Credit Report

The credit report will show whether your payments have been on time or late. You will be able to see all of your aliases. For example if your name was “Anthony Smith” you may see “Anthony Smith” and “Tony Smith” under the alias section.

You will be able to view all of your open lines of credit. This is important as too many lines of credit hurt your credit score. If you see cards in the list than you no longer use or need, you may want to cancel them. Before you do, however, read our article on “How Credit Scores Work - Top 5 Factors” first because if those unused acconts are in good standing, you may want to just leave them alone.

It is important that you check your credit report every year to ensure that the information is accurate. If you notice an error or suspect fraudulent activities on one of your credit cards you are able to report it and begin work on getting that information corrected. If you have a lot of negative items on your credit report (such as late delinquent payments, charge off’s, liens, collection accounts and so on) you will want to engage with a firm that can repair your credit. See our article on “Credit Repair” to learn what is involved, and how much you may be able to do yourself.

Staying aware and on top of your credit score are important steps when embarking on the path to better credit. It is important to understand why your credit score is what it is so you know what improvements to make.