CREDIT SCORES INCREASINGLY ARE BEING USED by numerous industries to evaluate risk. A damaged credit score can result in higher insurance premiums and increased borrowing costs, and could even cost you your dream job. Given the value and importance of credit scores, it surprises me how few people actively monitor their credit reports to insure their accuracy.

I frequently encounter borrowers who are surprised to find collections and other problems in their credit files. They usually have no idea that their credit is being damaged, and how severe the damage can be from one unpaid collection account or a couple of misreported late payments. I have seen credit score improvements by as much as 100 points simply from correcting a seemingly minor error in a borrower’s report.

It really is easy to monitor your own credit — and easy to notify credit bureaus of the error and dispute inaccurate information.

A website sponsored by the three major credit bureaus, Transunion, Equifax and Experian, was set up specifically to comply with federal law that states consumers are entitled to a free annual credit report. Per law, consumers can retrieve their credit file from each bureau free of charge, no strings attached.

While numerous websites offer free credit reports, the only official site is www.annualcredit report.com. You have gone to the wrong site if you are asked for money or offered other services such as credit monitoring for a fee.

As consumers have the right to examine their report annually from each bureau, it is possible to have a free look three times per year, simply by contacting a different bureau every four months.

I wrote last week about a young couple that discovered some unknown credit issues when they came in to apply for a home loan. In their case, a couple of medical collections had been resolved years earlier. But collection accounts tend to multiply as collection agencies sell the debt to other collectors, thereby creating multiple entries of the same debt. Once we were able to determine that these accounts were duplicates, the process of disputing the accounts was easy.

When a consumer pulls a report, they are given an electronic copy of the report to review before leaving the site. When viewing negative information, the site allows the opportunity to file an electronic dispute and upload supporting documents. The whole process takes less than 10 minutes; if there is more than one account to be disputed, the site walks you through the process as many times as necessary.

Once a dispute is filed, the bureau has 30 days to investigate the account and determine if the information being reported is accurate. Usually this involves reaching out to the creditor with a request that they substantiate the information. If the debt cannot be substantiated, the bureau is required to remove the erroneous information from the consumer’s credit file.

I always recommend my clients take a look at their credit three times per year to ensure it is being reported accurately. This is all the more important if you are planning a major purchase in the near future, such as a car or home. A little planning and research can save thousands — or be the difference between success and failure.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.

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