Review your credit report regularly to guard against identity theft and to maintain a strong credit rating.

Federal law requires the three major credit bureaus to provide consumers with one free copy of their report each year. To download and print a copy of your report from Equifax, TransUnion and Experian, click to www.annualcreditreport.com, the official website, for free reports.

It's smart to check reports from the major credit bureaus each year because the information is collected independently. Beware: Some Web sites may provide a copy of the report after signing you up for a credit monitoring service for about $80 a year.

"A credit report includes credit information, but does not include information on income, checking or savings accounts or investments," says David Rubinger, vice president for communications at Equifax. "The report only includes information associated with credit so credit grantors can have an accurate window into your past to make a loan decision."

Your FICO credit score, compiled by Fair Isaac Corporation, is derived from your payment history, outstanding debt, length of time you've had credit, new credit and types of credit you currently have. The credit score is reported on a scale of 300 to 850. It doesn't consider your race, religion, age, sex, marital status or where you live.

Remember that checking your credit report won't hurt your credit score and is a key step in maintaining fiscal health.

In general, a credit report includes personal information, a credit summary, account information, inquiries, collections and public records as well as instructions on how to dispute information in the report, a summary of your legal rights and tips on how to counter the effects of identity theft.

Review your personal information for accuracy. Be sure your name, date of birth and Social Security Number are correct. Keep in mind that companies voluntarily file information with the credit bureaus and clerical errors may appear. Be sure that someone else's financial data isn't mixed in with yours if some of your identifying information is scrambled.

The credit summary includes the name of the creditor, type of credit – installment such as a mortgage or revolving such as a major credit card. It also includes your credit limit, account status, the date the account was opened and a detailed payment history.

If the column titled "account status" reads "pays as agreed" that means you pay the balance due in full each month and you're in good shape. An amount in the "past due" column means you're behind in your payments and you'll take a hit on your credit rating. A large number of "past due" flags will knock your debt-to-equity ratio out of whack and pound your credit rating. Creditors like to see zeros in the "past due" column and this will strengthen your credit rating. Moral: Pay your bills on time.

Note that for security purposes, the last few digits of all account numbers appear as X's in the credit report.

Keep an eye on the list of closed accounts to be sure nothing has been overlooked. For security reasons, close unused accounts.

The inquiries section provides a list of everyone that has requested your credit report, including a bank if you've applied for a credit card or a mortgage. Some employers request a credit report as part of a background check before making a job offer. A credit check is also the first step in the endless flow of solicitations from credit card companies that clogs your mailbox, so don't make too much of the number of inquiries appearing on your report.

You want the public records section of the credit report to be blank because it lists bankruptcies, judgments and liens – entries guaranteed to hammer your credit rating. This type of negative information remains on your report for seven to ten years.

In addition, the credit report may include previous addresses, employers and spouse's name, if applicable. Some of this information may be out-of-date. In general, old addresses or past employers aren't a concern.

A section in the credit report tells you how to challenge inaccurate information. If you dispute an entry in your credit report, put it in writing. Date your correspondence and save a copy for your records.

Most people pay their bills on time. Less than half have been 30 days late on a payment, only about 30% have ever been 60 or more days overdue and less than 20% have had an account closed due to default. About 40% of credit card holders have a balance of less than $1,000 but about 15% have balances greater than $10,000, industry statistics show.

Used properly, credit is a valuable tool and can help you buy a car or a house. Those who view credit as free money pay through poor credit scores and higher interest rates.

"Review your report carefully for errors or fraud," Equifax's Rubinger says. "If you see evidence of fraud, immediately contact Equifax and place a fraud alert on your credit report. This notifies credit grantors that your report may be associated with identity theft."