The best way to protect and improve your credit is to review and understand your annual credit report. A credit report lists all your credit accounts, balances and payment history. It also includes employment history and public record information such as liens, bankruptcies and foreclosures.

Many consumers assume a credit report and a credit score are synonymous. Your credit score is based on a statistical analysis of your credit history and rates the probability that you will pay your bills in a timely manner. A credit score is based on the details given in your credit report. That is why it is vital to know what is on your credit report. It is essential that you study your report for any errors and take steps to correct those mistakes.

The Fair Credit Reporting Act (FCRA) gives every consumer the right to obtain a free annual credit report. FCRA was established to protect consumers and make sure that all credit reporting is executed properly. All information on your credit is gathered by Consumer Reporting Agencies, or CRAs. A credit bureau is the most common type of CRA. Equifax, Experian and TransUnion are the three largest and most recognizable credit bureaus. Under FCRA, everyone is now entitled to one free annual credit report from each of these three major credit report agencies.

To obtain a free annual credit report, you have to use one of the following three methods. You can do it online with AnnualCreditReport.com There is no other online method for your free annual credit report. If you are not comfortable making the request online, you can call (877) 322 8228. If neither of those options sounds good to you, you can submit your request in the mail. You will need the mailing address and form from the back of the Annual Credit Report Request brochure, which can be ordered or printed from the Federal Trade Commission web site.

You can also pay a fee for your annual credit report and request one directly from the credit bureaus. If you are in a state that offers a free annual credit report from the credit bureaus, you can bypass the Federal Trade Commission method. If you are applying for unemployment or have ever been turned down for employment, insurance or a loan because of your credit report, you are also entitled to a free report.

Although you are now entitled to a free annual credit report from each of the three major credit reporting agencies, the agencies do not send them out automatically. You must request the report yourself. Regardless of the method you use to receive your credit report, review your report every year. An annual credit report is the easiest way to stay informed of any inaccuracies and protect your credit history.