Customers often ask why lenders need to review their credit report before approving them for a home or car loan or a credit card.

Credit reports contain a lot of valuable information about your previous financial behavior and help lenders predict whether you’ll pay off any new debt. Therefore, its important that you maintain a good credit report.

If you’re just starting out, there are several ways to establish a good credit history. You could apply for a credit card or obtain an installment loan. It’s smart to start out using credit cards and installment loans for small items. This gives you time to gain experience with working monthly payments into your budget.

Just as credit cards and loans can help build your credit history, so too can your everyday actions. Always be sure to pay your bills on time, including rent, electric, gas water and television bills.

If you are interested in learning more about your credit report, Equifax, Experian and TransUnion aer the three major credit reporting agencies. You can contact one of these companies to obtain a copy of your credit report or visit www.annualcreditreport.com for one free copy of your credit report from the three major agencies per year. Please use caution, some of the other credit agencies offer free annual reports after you commit to a service membership.

Unfortunately, there are times when we may find ourselves with an unfavorable credit rating.

If you’ve found yourself in this position, there are steps you can take to improve your credit report.

4 Begin paying your bills on time.

4 Avoid taking on any new debt.

4 Work with your current creditors to repay your debts.

4 If you are very late on your payments, consider calling a credit counseling agency instead of claiming bankruptcy.

Credit counseling can assist you in reducing your debt without as much damage to your credit report. By addressing our problems early, many creditors will be willing to work with you provided you show a sincere interest in repaying your debts.

Whether you’re just now beginning to establish credit for yourself or you’re trying to improve your credit rating, taking smart steps now will enable you to enjoy greater opportunities later, when it comes time for you to apply for a loan on a new home or that car you’ve been eyeing, you’ll be confident that your credit report won’t be stopping you from the things you enjoy.

Stuart Heflin is a Natchez-based State Farm insurance agent. He can be reached at 601-442-9138.