Your credit history is extremely important when getting a loan. It tells the banks what level of risk you carry as a borrower, by summarizing all of your past credit accounts and payments. Generally, the lower the risk you are, the less the bank can charge in interest. The long detailed summary of your credit history is called your credit report.

There are 3 main credit tracking agencies, Trans Union, Experian, and Equifax. Their reports will vary a bit from agency to agency as they harvest information differently. Lenders use all three to form a complete and thorough summary of your credit history and potential risk. Each credit reporting agency then will statistically summarize your credit history into one number called your FICO score, ranging from 300 up to 850. The 3 agencies will often give 3 different FICO scores for you, as they each obtain and analyze information differently. The banks will usually take your 3 FICO scores, and use only your middle FICO score for their loan application.

Your credit is extremely important to build, protect, and monitor especially in today's world of identity theft. Many people do not know this, but when identity theft occurs, it is YOUR responsibility to prove that YOU did not open the credit accounts in question and take the money or goods. It is very difficult and sometimes impossible in today’s web-based world to prove this, as it plainly looks like YOU did it. It can literally be a nightmare to repair. This is why it is important to constantly monitor your credit.

You can monitor your credit yourself by getting a copy of each of your credit reports once a year for free, or you can pay to have your credit monitored by many different services which charge a monthly fee of around $15. Either way, regularly monitoring your credit is a financially savvy practice that everyone should do at least once a year.

Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to www.AnnualCreditReport.com This is the ONLY non-soliciting credit report website I have found. All of the other credit report sites, which have very similar names, are all selling a service of some type. I have used the site above myself and it is legitimate. While you get your 3 credit reports for free, each agency will charge between $6-$8 each for your FICO score.

If you use the website, make SURE you are on a secure/encrypted internet connection and/or network as you will need to give your social security number. You may also call them at 1-877-322-8228 to request your reports if you dontt want to use the internet.