Since they were developed in the late ‘80s, credit scores have become integral to determining how risky we all are as loan recipients, credit card applicants, or even tenants. FICO scores are utilized in 90 percent of lending decisions, and range from 300-850, with 700 being considered a “good” score. A FICO credit score is the summary of your credit report, and is determined by the following factors:

• 35% Payment History: can you make consistent, on-time payments?
• 30% Credit Utilization: How much debt is owed to how much credit is available?
• 15% Length of Credit History: How long have your lines of credit been open?
• 10% New Credit: Did you just open four credit cards in a very small amount of time?
• 10% Credit Mix: Can you successfully manage different types of credit (loans, credit cards, car payments, mortgages)

That’s a lot to keep track of! But it’s important to keep track of something so critical to your financial health. Luckily, you can check your free credit report with each of the three main credit bureaus (Experian, TransUnion, and Equifax) once each year for free—it’s a federal law under the Fair Credit Reporting Act. Here are just a few reasons you might want to check yours:

It may seem intimidating, but it’s better to know what your score is so you can take steps to improve it. Even if your score is pretty good, it’s best to know what range you fall in if you’re going to apply for a loan or credit card, as your credit score often determines your interest rate or credit limit. So if you’re planning to buy a home, car, or major purchase, move into a new apartment, or hoping to refinance an existing loan, it’s good to know where you stand.

It can take years to build up a healthy credit history. Keeping track of your credit score puts you in control of your credit, so you’ll be prepared to take action if you notice it take a dip.

Accidents happen! According to a study by the Federal Trade Commission, one in five people has found a mistake on one of their credit reports. Not all of these mistakes impacted their credit scores, but you can never be too careful with something so important. Examples of errors that could affect your credit score include closed accounts listed as open, accounts mistakenly listed as defaulted, or being listed as the account holder when you were only an authorized user. Plus there’s always the risk of identity theft and credit card fraud.

Your credit score can change daily, but that doesn’t mean you have to check it so often. Still, even checking it monthly or semiannually could help you better understand how all of your financial actions and decisions can impact that three-digit number. If you need to take action to fix your score, you’ll be able to do it more quickly than if you only check your credit every few years.

Have you seen your credit score jump in the last year? It could be time to request your credit card issuer lower your interest rate—or accept an offer for a better one with much better rates and perks. If your issuer won’t lower your interest rates, you could also try to pay off your debt with a balance transfer card with lower rates—something your new and improved credit score could make you eligible for. Knowing your credit score could also help you be a more informed shopper if you’re in the market for a mortgage or a loan.

You should check your credit report at least once a year just to make sure everything is accurate. If you suspect you’ve been a victim of identity theft, are actively trying to repair your credit, or are about to apply for a major loan, you should monitor it more closely.

You might have heard that checking your credit hurts your score, which isn’t quite true. There are two types of credit inquiries: hard checks and soft checks.

A hard credit inquiry does impact your credit score and will stay on your credit report for two years. These usually happen when you are applying for a new loan, mortgage, or credit card. A standard hard credit check can knock about five points off your credit score since it is an indication that you are looking to borrow money. Applying for multiple loans or credit cards with a hard credit check could really negatively impact your credit score.

You get one of your annual free credit reports, however, would qualify as a soft check. While this soft check might show up on your credit report, it won’t affect your credit at all. Sometimes lenders will only run soft credit checks while assessing you for loans, meaning these credit checks won’t impact your credit, either. It’s actually helpful to stay familiar with your credit score so that you won’t apply for loans you won’t qualify for and needlessly lose points to a lender’s hard credit inquiry.