WASHINGTON (Reuters) - Credit scores and reports are important, and not just for home buyers.

Landlords, employers, banks, car dealers and insurance companies all want to know what kind of borrower you are before they do business with you.

But that doesn’t mean you need to go overboard, like some monitoring firms would have you believe. Watch their commercials, and you get the feeling that if you don’t stay home from work to watch your credit file 24/7, you’ll face financial ruin and lose your identity, too. It shouldn’t come as a shock that many of those services also charge fees for information that costs nothing elsewhere.

There are easy, genuinely free ways to stay on top of your credit files and use them to save money.

Here’s what you need to know now to do that.

• Understand the difference between your credit report and your credit score. Your credit report is the record of all of your credit transactions: your loans and credit cards, your credit limits and your payment history. Your score is a single number that is derived by feeding all of the data from your credit report through a complex algorithm.
• You should check your credit report at least once a year to make sure there are no mistakes in it. Credit reports are created and kept by three separate credit reporting agencies: TransUnion, Equifax and Experian. All three should have the same facts on their reports. You can get one free report from each of them every year by going to the website annualcreditreport.com. You may want to monitor your credit report more often than that, if you are getting ready to buy a house or take out a large loan for some other purpose.
• Between now and Sept. 24, you can also sign up for six months of free credit monitoring from TransUnion at the website https://www.listclassaction.com/. This is part of the settlement of a large class-action suit against the company.
• Most lenders use your credit score in deciding how worthy you are. And they charge people with low scores more. The most widely used score was developed by Fair Isaac Corp. and is called a FICO score. But each of the three agencies are producing their own scores and have also banded together to create a fourth common score, called a VantageScore.