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Just as you would tidy up and organize your closets or garage, you should make sure your credit report is clean. Your credit history is the foundation of your financial life. The information in that report is the basis for your credit score, which is used to decide whether you get a loan, how much you pay for the loan – even how much you’ll pay for other products, such as insurance.

Good news: You can get your credit report for free at myBankrate.

Minding your credit report only when you’re about to make a big purchase such as a house or a car can backfire. Some issues take time to sort out, and if you’re racing against the clock to secure a loan, you’ll wish you’d paid attention sooner.

Here are seven steps to clean up your credit report.

1. Monitor your credit report at regular intervals

Federal law entitles you to a free copy of your credit report once every 12 months from each of the major credit-reporting agencies: Equifax, Experian and TransUnion. You can get a free copy of all three bureaus’ versions of your credit report at AnnualCreditReport.com.

Order one at a time and space them out over the year so you can check your credit report every few months. If you’re getting acquainted with your credit history for the first time, order all three at once.

If you’re turned down for a job or credit, or you don’t get the best interest rate on a loan, you have a legal right to review your credit report at no charge. The letter you get notifying you of the decision will include a number for you to call.

2. Review your identification info

The most important part of your credit report is your identifying information: your name, address and Social Security number, says Natalie Lohrenz, strategic partner liaison at GreenPath Financial Wellness in Santa Ana, California.

“People obsess over tiny fluctuations in their credit score, but what they should focus on is the question: Is it accurate?” she says.

A serious error such as an incorrect Social Security number can have serious consequences and needs to be addressed immediately. After checking all the identifying information, look at the accounts and make sure they’re all yours. Keep in mind that some lenders, such as the financing companies that issue store-brand credit cards, probably will have a different name than the one on the storefront.

3. Check your report for discrepancies

Watch out for accounts you don’t recognize and verify that any accounts containing negative information belong to you. It’s possible someone else’s account information is included in your credit report by mistake.

Another red flag is an account with a much higher balance than what you carry. This could indicate mistaken identity or identity theft.

Jessica Cecere, who worked at CredAbility (now ClearPoint Credit Counseling Solutions) for over 25 years, says one common credit-report error is the inclusion of old, negative information that should have come off the person’s record.

Most negative information stays on a credit report for seven years, and Chapter 7 bankruptcies remain for 10.

4. Watch out for phantom money

Lohrenz says a consumer with a history of collections may have outstanding balances on their report that are larger than they actually are because of the booming secondary market for collections. Here’s how it happens: If a consumer has a credit card balance and becomes delinquent, the issuer will try to collect for a while, then give up and sell the account to a collection agency.

The card balance should then drop to zero, and a new account, this time with the collection agency, should appear on the report. Sometimes, though, the issuer doesn’t strike that balance from its records, so it will appear as if the consumer has two outstanding debts.

If the debt is bought and sold numerous times, which is common, the problem can multiply.

Another instance of phantom money can occur when a consumer has a closed bank account that has an overdraft protection line of credit tied to it. In some instances, that line of credit will remain on a person’s report even after the account is closed, says Steve Bucci, author of “Credit Management Kit for Dummies.”

5. Dispute mistakes the right way

If you find a major mistake, order your credit report from all three bureaus to determine whether the problem is limited to just one report. Then, determine whether you need to take up your dispute with the credit-reporting bureau or the lender.

If there’s someone else’s information on your report, or there are accounts listed that aren’t familiar to you, contact the credit bureau. All three bureaus have online dispute forms, which is faster than snail mail for resolving credit-report problems.

“Taking things up with the bureau is easier because they have one set process,” Bucci says. “There’s a dispute process in place so you can dispute any account with the same process, whereas when you contact the creditor, every one’s a little different. It’s not as neat and simple.”

If there is negative information that’s more than seven years old or an outstanding balance that has been paid off, contact the lender directly.

6. Document everything! And follow up

It would be great if you could just file a dispute and forget about it, but you have to follow up. If a bad or incorrect item on your credit report is very old, the creditor may have been bought, merged or gone out of business, which makes documenting everything important.

Keep notes on the people you speak with at the credit bureaus and lending institutions, when you contacted them and the date any corrective action is supposed to be taken. Check your credit report after that date to make sure they followed through.

The three credit bureaus “talk” to each other electronically, so a correction made on one report should be reflected on the other versions, too.

7. Know what not to sweat

Items on your credit report that might seem alarming but aren’t include:

  • Closed accounts in good standing: Leaving them on your report can be good.
  • Credit inquiries: A hard inquiry will show up on your report if you applied for a loan or credit card. It can also crop up if you enter into a service contract for a cable TV or cellphone plan.

“Honestly, a hard inquiry is a very small impact on your credit score, and it’s short term,” says Maxine Sweet, retired vice president of public education at Experian. “It stays on for two years, but it has the most impact only within six months.”