Make Sure Your Credit is in Good Shape

A major purchase will likely require a loan, so make sure you're well-positioned to borrow money by checking your credit score and report

Why your credit score is important 

Your credit can change from month to month. A higher credit score (above 700) can help you get better interest rates on credit cards, car loans and mortgages, and can result in lower insurance rates. 

Go to AnnualCreditReport.com to look over your credit report, which includes your payment history as well as any delinquent accounts, bankruptcies, foreclosures or lawsuits. You're allowed to have one free credit report from each credit reporting company every 12 months. 

Check the information to be sure it is correct. Scrutinize anything that doesn't seem right-like an account that you don't recognize. Dispute inaccuracies with the credit reporting company. 

If your score isn't as high as you'd like, take steps to improve it. The most important factors in building or maintaining good credit are to pay your bills on time and in full each month. Another factor is your credit utilization rate - the ratio of credit you're using compared to your full available credit limit. 

Keep your account balances at or below 30 percent of your credit limit.