I'm not going to harp on the advantages of having a good credit score. OK, maybe I'll go on a little bit about how stellar credit means paying less interest on loans, qualifying for lower insurance premiums, and sailing through things like landlord and employment background checks. But if the standard spiel hasn't inspired you to spiff up your credit score by now, repetition probably won't work.

So instead, I'm going to use a tried-and-true motivational tactic to get you to care about your credit score: bribery.

Still here? Good!
What if I told you there's a potential 512 smackeroos a month in it for you, just for sticking with me for another three minutes?

Here's how: $512 is the difference between what someone with a good credit score -- defined as 760 and above, using the FICO scoring system from Fair Isaac (NYSE:FIC) -- and someone with poor credit (550-600) pays each month to service his or her everyday financial obligations.

See for yourself:


Credit Score


Monthly Payment

Money in the Bank

$150,000, 30-year mortgage





  660-699 6.29% $927  
  580-619 9.45% $1,256  

$25,000, 36-month auto loan





  660-689 8.84% $793  
  590-619 14.67% $863  

$2,000 base rate on car/homeowners' insurance


Discount off base rate: 30%



  650-699 19% $135  
  550-599 9% $151.67  
Monthly savings with good credit score:       $512

Source: myFICO.com. As of Sept. 29, 2008.

The lesson here is pretty clear: Spruce up your credit, and start saving some serious cash.

See how you rate starting right now -- and for free!
If you have a secure Internet connection and don't mind sharing your Social Security number online, a rundown of all of your credit deeds (and misdeeds), as well as your credit score, are just moments away -- and for free, even!

Pull your credit files: To see where you currently stand, head to annualcreditreport.com to get your Equifax (NYSE:EFX), TransUnion and Experian credit reports for free once a year. If you're more comfortable transacting offline, call (877) 322-8228.

If you haven't reviewed your credit files lately -- or ever -- pull all three at once to get the full picture of your credit reputation. Creditors don't always provide data to all three bureaus, so you can't assume that what's in one of your files is the same in all three. You can also spread out your freebie requests over the course of the calendar year to keep an eye out for any funny business.

Check your credit score: I know you're itching to see where you stand, and CreditKarma.com offers instant gratification. You get a free credit score without the gotchas, like the product trials you have to remember to cancel, that make other "free" score offers a pain. CreditKarma.com makes its money by letting partners pitch their products to you on your results page. The score is generated by TransUnion and translated into the standard FICO range of 300 to 850.

If you're confused by all of this talk about scores, it's little wonder. There are many kinds of scores out there -- from FICO to VantageScore, EMPIRICA, BEACON, and more. The important thing is knowing where you rate on the general scale of atrocious to awesome, and to aim for the latter.

By the way, checking your own score does not ding your credit -- it's called a "soft" inquiry, which is like window-shopping at the mall without a wallet. A "hard inquiry" indicates that you mean business -- you're trying to close a deal, and you've authorized a lender to check you out. A few such inquiries a year won't adversely affect your score.

Shape up your credit, and start saving
The information in your files determines your credit score and what you shell out every month to financial-service providers. (Review the chart above for a refresher.)

If you've done some less-than-stellar things in the past with your plastic, don't fret. There's plenty you can do to improve your credit reputation. Read on:

Dayana Yochim has nothing in her credit report to be ashamed of. Thankfully, no one compiles fashion files, or the '80s would still be haunting her file. As long as we're 'fessing up, Dayana owns none of the public companies mentioned in this article. The Fool's disclosure policy makes us tell you that.