At some point, you’re likely going to want to borrow for a big ticket purchase – a home, a car, a college education. Preparing for that day means staying on top of your credit score now.

Part of being a smart consumer is managing your credit history and your credit score. Your efforts will be rewarded – a good credit score gets you lower interest rates, thus saving you money. It’s also particularly important now, because the recession tightened lending requirements. What used to be considered an excellent credit score may now be only good. Generally, if your score lands above 740 (on the FICO score range of 300 – 850) you’re in great shape.

So how do you keep on top of things? By getting your credit report regularly. Luckily, it’s free. Several years ago, the three major credit bureaus came together to create and host a website, annualcreditreport.com, that allows you to pull one copy of your credit report from each bureau every single year. That’s three free copies total within a one-year span, and I suggest spreading them out throughout the year. Pulling one every four months means you can stay on top of your file and spot any suspicious or inaccurate activity quickly.Once you have your report in hand, you have to know how to read it. Start with your personal data. Are there any mistakes? You’re looking for red flags like names you’ve never gone by, addresses you’ve never occupied, or errors in yCredit Cardour Social Security number’s digits. If all of that information is correct, move on to your accounts. Make sure that they are all ones that you’re aware of, and that the information is accurate right down to the credit limit, account status, balance, and payment history. If you have any negative information on your report, you need to check the accuracy of that too. Make sure that if you’ve declared bankruptcy, all debts included in your filing are noted on your report, and if you’ve settled debts, they should be listed as such.

Finally, you want to look at your inquiries. Every time you apply for credit, whether it’s a new credit card, an increase in your credit limit, or a loan, the lender takes a peak into your credit file. Make sure that the inquiries listed on your report are ones that you are aware of—in other words, you applied for that loan or credit card, and no one was trying to apply in your name without your knowing.

If you find an error, it’s up to you to dispute it. If it’s just a simple mistake—like an address that needs updating—you can contact the creditor and ask them to fix it. They will send an update to each credit bureau, so follow up to make sure they do. If your creditor is unable to make the correction, you need to dispute it with the credit bureaus by sending a notice to each one. All three bureaus allow you to dispute information online, but where you can, you should also send a written letter. List all mistakes with a description of why the information is inaccurate and how it should be updated. Include any back up information, such as your account records, for proof, as well as your phone number and social security number. Give the bureau 30 days to investigate. If you don’t hear back (you should receive a letter detailing what was updated on your credit report, or an email if you submitted your dispute online), follow up and keep a paper trail.

Unfortunately, you can’t access your FICO score for free. You can buy one of your scores for $19.95 from myFICO.com (you have two FICO scores, one based on information in your Equifax report and one based on information in your TransUnion report. Experian split from FICO a couple years ago – you can buy their score from experian.com for $14.95). Your scores between bureaus will vary slightly, but they should be relatively similar.

I can see you scratching your heads. You listen to the radio. You see those commercials on television— they say you can get your score for free. Those deals generally require you to sign up for a credit monitoring service, which will cost you in the neighborhood of $15 a month. You do that, and they’ll give you a free score. Is it worth it? Sure, if you cancel the monitoring service before you incur any charges.

You can also get a free approximation of your score from our website. But if you’re going to be applying for a major loan (car, mortgage), I’d shell over the cash for a FICO score six months or a year before you apply.

By Jean Chatzky, SavvyMoney

Copyright 2018, SavvyMoney, Inc.