How to Get Free Credit Reports -- With Score

With the economy taking a turn for the worse, your credit report is taking on a bigger significance when you seek to borrow money.

Lending institutions are attempting to reduce their risks and giving more scrutiny to your credit score. Despite this, many people still don't understand the importance that their credit score plays in many aspects of their financial life.

In an April survey, The Center for Economic and Entrepreneurial Literacy asked 1,000 people what were the four most relevant factors in obtaining a mortgage loan. Even though credit score tops this list, nearly seven out of 10 respondents failed to identify it as the most important factor when obtaining a home loan.

Your credit score goes far beyond influencing the rate you receive on a home mortgage. It will help determine the rate you get on a car loan, the interest rate you pay on credit card balances and which type of credit cards you qualify for. It influences the rates you pay for auto, health and homeowners insurance.

It can even influence whether you get a job; people with poor credit can be viewed as more likely to have problems at work. It's common for apartment managers to run a credit check on prospective tenants, too -- so your ability to find a place to live may depend on it.

In all, a good credit score can be worth more than $1 million in savings during your lifetime over someone with poor credit.

Getting your credit report for free has been easy for the last few years through the government-sponsored Web site AnnualCreditReport.com.