Check your credit

It’s important to keep track of your credit record and credit score — especially if you have some borrowing in your future, such as for a new car or a new house. Your credit record determines your credit score, and the higher your credit score, the better interest rates you’ll be offered.

Consider this: If you were to borrow $200,000 for a $250,000 home with a 30-year fixed-rate mortgage, your monthly payment might be around $955 with a 4 percent interest rate — but $1,074 at 5 percent interest. That $119 monthly difference will amount to $1,428 over a year and will cost you almost $43,000 in total interest paid over the 30 years.

While your credit report is likely several pages long, listing your creditors, bill-paying history and much more, your credit score is just a single number. Many credit cards offer free access to your credit score, and that’s handy whether you’re just curious or are working on improving it. (You do that by paying bills on time and paying off debts, among other things.)

You should review your credit reports regularly, to find and fix any errors that might lower your score. (While you’re there, look for any signs of unauthorized activity, which might reflect identity theft.) Each report should tell you how to dispute anything that you believe is an error.

If a report contains information that’s negative but accurate, it’s likely to remain on your report for up to seven to 10 years. Fortunately, though, credit issuers tend to give more weight to your recent bill-paying history, so a clean record for the last year or two can make a real difference. Keep paying your bills on time, and your credit score will increase.

Everyone in the United States is legally entitled to an annual free copy of their credit report from each of the main credit-reporting bureaus: Equifax, Experian and Transunion. It’s smart to review reports from all three bureaus, as they may differ. Learn more about credit reports and how to order your free ones at Consumer.ftc.gov.