There is no excuse today for not knowing your credit score, that all-important number that can have such an impact on your financial future. Thanks to the Fair Credit Reporting Act, you are entitled to receive a free copy of your credit reports from each of the three main credit reporting agencies. Because the three agencies may have different information in your file, it is important to get copies from all three so you can compare.

Once you have contacted the three major credit agencies to obtain your free credit reports, you may find yourself in possession of seemingly indecipherable documentation. Understanding your credit report can be a confusing and frustrating endeavor, but it is essential if you hope to improve your score in the future.

Your credit score is based on a closely-guarded mathematical formula that estimates the risk you pose to potential creditors. A low score can bar you from future borrowing, or can mean lender only offer you high interest rates. A high score can give you access to low-rate loans with favorable terms. Credit scores range from 300 to 850. A score between 700 and 850 is good, one between 600 and 700 has room for improvement, and one below 600 needs some serious assistance.

If you do have a credit score above 700, you are considered an excellent credit risk. You should easily obtain future credit, and should be offered the best interest rates and loan terms available. If you score is below 700, you should work to raise it, especially if you hope to apply for a large loan like a mortgage or car loan in the future.

If your number is lower than you would like it to be, there are steps you can take to improve your credit score. Making on-time payments for more than the minimum amount due can help lower your debt and raise your score. Transferring balance from high-rate cards to low-rate ones, or taking out a loan to consolidate your debt, can cut interest payments and help you pay down your balance faster. Credit counseling can give you the tools necessary to set and stick to a budget, as well as helping you to negotiate lower payments and rates if necessary.

Check your report at least once a year to make sure the information in your file is correct. Credit reporting agencies are notorious for including inaccurate information that can destroy your credit if not corrected in a timely manner. If you find errors in your reports, you should immediately report them to the credit reporting agency and demand deletion. Take control of your financial future; order and review copies of your credit report today.