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Understanding your credit score and how it is calculated helps you take control of your credit and may lead to lower interest rates and more money-saving opportunities. Your credit report is one of the most important documents in your life. Whether you’re taking out a mortgage, a car loan or applying for a credit card, your credit report has a huge influence on the offers that lenders will approve you for.

At Bankrate, we believe your score plays a key role in understanding your overall financial situation. Not only does it help you make sense of your report, it provides a deeper insight into what creditors and lenders look for when determining whether you qualify for a credit card or loan. That’s why it’s important to check your credit report at least annually. Keeping tabs on it regularly is better, though, because spotting mistakes and irregularities can prevent fraud, identity theft and other credit nightmares.

Take a few minutes to get your free credit score and free credit report at Bankrate.com.

Clear up mistakes, prevent fraud

If it’s been a long time since you checked your credit report, there’s a good chance it contains incorrect or outdated information. Eighty percent of credit reports contain bad information, according to Deborah McNaughton, founder of Professional Credit Counselors. Common credit report errors include wrong birth dates, misspelled names and incorrect account details. It can take 30 to 45 days to get your credit report corrected.

By law, consumers are entitled to one free credit report per year from each of the three major credit-reporting bureaus: Equifax, Experian and TransUnion. The Fair and Accurate Credit Transaction Act of 2003 gives consumers that right and requires the credit bureaus to provide a free credit report upon request through a centralized source, AnnualCreditReport.com.

Know your credit score

You should also check your FICO score, a credit score that’s based on several aspects of your financial profile and the one lenders use most often to predict your reliability as a borrower. FICO scores are not available at AnnualCreditReport.com and must be purchased.

The higher your credit score, the less risk you pose to lenders. FICO scores range from 300 to 850, with 850 considered nearly perfect.

Get your free credit score today at Bankrate.com.

Credit checks and credit scores

An inquiry into your creditworthiness counts as either a “hard pull” or “soft pull” on your credit report. Hard pulls are credit inquiries from banks and other lenders assessing your credit risk after you’ve applied for a loan. A hard pull may temporarily lower your FICO score by a few points.

A soft pull is when your credit report is checked by a company or employer as part of a background screening or a lender preapproves you for a loan. Soft pulls do not hurt your credit score and can be done without your knowledge.

For peace of mind, get your free credit report and free credit score.