Making sure that your credit file is up-to-date and, more importantly, correct, is an effective way of ensuring that no false or incorrect data is being held about you. It's best to do this at least once a year and it's easy and cheap to do. You can usually get your first credit check for free.

Visit a site such as www.equifax.com and just follow the on-screen instructions. You'll need to have your social security number handy as well as your current and possibly previous addresses. There are three credit reference agencies; Equifax, Transunion and Experian and each one allows one free access per year. If you're worried about identity theft or having your details fraudulently used, you can check as often as every 4 months.

Once you have your information on-screen, send it to your printer so you can thoroughly check it out at your leisure. Look very carefully at all the entries and make sure that none of them are unfamiliar. Also check if any entry suggests there have been late or missed payments. If you believe the entry to be incorrect, highlight it for reference later.

Some of the agencies will allow you to see what your 'credit score' is. This is basically an indicator to someone planning on lending to you how likely it is that you'll make the repayments as per the agreement. If you haven't taken out much credit or if you've been late with existing repayments, this will lower your score.

Ensure that once you've checked your printed file you either shred it or put it somewhere safe. It will contain a lot of personal information and if it were to get into the wrong hands, could ruin your credit history and possibly make you liable for the debt run up by someone else.

If you do discover something suspect on your file, contact the agency and ask that a 'fraud alert' is placed on your file. This will then make sure that any new or suspect activity is checked out before it goes any further. If your dispute surrounds a late payment for example, but you believe you made it on time, send copies of the relevant proof - such as date stamped receipts - to the credit reference agency.

If you believe someone has stolen your identity to acquire money, report it to the police right away then inform the agency. They will want you to inform them in writing too with a copy of your police report. Always send documents by registered mail and keep copies of everything in a safe place.

However, to protect your record from these types of dangers, you can use a service like LifeLock. What LifeLock does is give you fraud alerts, change alerts, phone verification, junk mail blocking, your credit report and more. They will send you credit reports every year, so it's worthwhile for that reason alone.

Overall, it's very important to keep your credit status in check and often. Make sure you take the right measures to ensure you don't fall victim to scams or any other nasty business. Good luck!