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What is the most important thing you need to know about credit scores? Is it the fact that your payment history makes up over a third of your score, and one late payment can drop it by 25, 50, 75 points or more? Is it that high balances reported for any of your credit cards can lower your scores, even if you pay your balances in full each month? How about the fact that you have many different credit scores — not just one — and no single number is the “real” one? Or that there is no single answer to the question, “What is a good credit score?”

While it is good to understand all those things, in my view, the most important thing to know about credit scores is the fact that they are calculated (or created) when they are requested, based on the credit information available at that moment in time. There are three reasons why I consider that knowledge critical.

1. Your Credit Report Is Key

The data available through the credit reporting agency that’s been selected to calculate your score (Equifax, Experian or TransUnion) will determine that three-digit number, whether that data is right or wrong. That’s why it is so important to review your credit reports; at a minimum get your free credit reports from all three bureaus once a year to give them the once-over. Since the three agencies don’t share information with each other, you’ll want to check all three. After all, you never know which reporting agency a lender will use to obtain your score, so you want all of them to be as accurate as possible. (And if you find a mistake on your credit report, dispute it.)

2. Credit Scores Aren’t Set in Stone

Because information can be added to (or removed from) your credit scores at any moment, your scores can change — and sometimes they change quickly, either in a positive or negative direction. On one hand, that should give someone who doesn’t have a high credit score hope: Things can and will change. On the other, it should be a warning that you need to be vigilant. If a mistake or, heaven forbid, identity theft damages your credit, you’ll want to know about it as soon as possible so you can react right away.

3. You Help Shape Your Score

Even if you’ve had serious credit problems in the past, you can begin to rebuild your credit today. It’s true that trying to build better credit can feel enormously frustrating, but there are almost always steps you can take to move in the right direction, even if it’s just getting a secured credit card with a small limit and using it carefully. As negative information becomes older, it typically has less impact on your credit scores (provided you have current credit references paid on time) and eventually it will no longer be reported — which means for all intents and purposes that it will disappear from the credit score calculation. You can get your credit score for free, along with an action plan for your credit, at Credit.com.

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