You might have heard your credit reports are free to obtain every year. You possible even know three consumer reporting agencies track how you manage your loans and bank accounts. One thing you do know is your credit future is based on financial information gathered about you. But how well do you understand these credit reports? And more importantly, what they communicate to prospective lenders?

Know where to find the negative. Different credit agencies produce different-looking reports. Thankfully all place adverse or negative accounts in the first couple of pages. Here you’ll find the account name, balance due and the last time you made a payment. Sallie Mae offers a good example of how to read a credit report.

Figure out why it is negative. The number one reason an account is reported as adverse is because the payments are late. Also, if a debt was sold to a third part or into collections, the company information will be reported here. This is where terms like bankruptcy and charge-off show up.

Fix the negative. If you do have negative information, the most important band-aid you have on any mark is being aware of the statute of limitations. This is refers to how long you have until you are no longer are responsible for the debt. These laws or timelines vary for each state as well as the type of mark reported.

Pay attention to your debt-to-credit ratio. Perhaps you do not have a negative account. However, keep in mind how much you owe with accounts in good standing is weighed very heavily by potential lenders. If a credit card is almost maxed, you’ll be viewed as a risk. You want what you owe to only take up about 25% of what you can spend or to be even lower.

Check out who is checking you out. Every time you opt for a new department store credit card or look into signing a housing lease, your credit could be checked. Too many inquires on your credit report is another item that makes loaners uneasy. If you haven’t been looking into new credit but inquires are there, someone could be trying to steal your identity.

Find out about your rights. Under the Fair Credit Reporting Act (FCRA), you have the right to review and maintain your reports, which involves writing letters to clarify adverse information that might be outdated (like the statute of limitations) or even untrue. Remember the best person to lobby for a clean credit report is you.