Identity theft is a hot topic in today’s news with endless commercials discussing how to check your credit score online for free, yet many people remain indifferent regarding their credit situation. A yearly review of your credit report can help find inaccuracies that can hurt your credit score or uncover instances of identity theft. Credit rating agencies use your credit history to determine a single credit score that lets lenders know how risky you may be as a borrower. So, why should you care about your credit score, and how can you maintain good credit?

Bad credit is costly. The interest rate you pay on credit cards, auto loans, student loans and mortgages are all related to your credit score. This means someone with bad credit may pay thousands more for the same car as someone with good credit. Bad credit also can make it harder to rent a nice apartment, to have low insurance payments and could cost you a job since potential employers can check your credit report, too.

Work with creditors. Emergencies happen! You may have medical bills, student loan payments or other expenses you struggle to pay. Creditors often will work with you on repayment. They may delay when you start making payments or reduce the amount of each payment until you get back on your feet. Contacting creditors early is crucial if you find yourself struggling to pay your bills.

Establish good financial habits. Frequently missing payments or making late payments are common mistakes people make regarding credit. The key to keeping good credit is to establish good financial habits and stick to them. This could mean using online bill pay or setting aside one day a month to pay bills.

Monitor your savings and establish a budget. Frequently monitor your bank accounts to avoid overdrafts and consider using one of the many websites or apps to help you with budgeting. Establishing a budget helps ensure you live within your means.