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Do you know your credit score? Do you know why it matters? Your credit score is a window into your financial history and offers clues into how responsible and stable you are with your money.

Like it or not, your credit score affects your family’s financial freedom in several ways. It influences your loan and credit eligibility—and your rates—for buying or renting a home or apartment, a vehicle, furniture, and other major purchases. A credit score can even affect a family member’s ability to land a job. About 16% of employers run credit or financial checks on all job candidates, and almost one-third do credit checks on some candidates as part of the hiring process.

Complicating matters is the fact that you don’t have just one credit score. Most lenders will rely on scores from one of the three main credit bureaus in the U.S., which are Experian, TransUnion and Equifax. Each one collects and shares your financial information differently, and scores are usually determined using a FICO Score or VantageScore formula.

The good news is that each formula relies on similar factors that are mostly in your control. For example, here’s the breakdown of your FICO Score:

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The average FICO Score in the U.S. rose to 711 in 2020. That number is in the “good” category. The higher your score, the better financial opportunities and rates you may be offered. The score ranges for FICO are:

• 800-850: Exceptional
• 740-799: Very good
• 670-739: Good
• 580-669: Fair
• 300-579: Very poor

How can you raise your score? Follow these steps:

1. Check your score regularly. Do this for two reasons: To keep an eye on your number and what factors influence it, and to be sure fraud (like identity theft) isn’t affecting your score. Usually, consumers can receive a free credit report annually. But through April 20, 2021, Experian, TransUnion, and Equifax are offering all U.S. consumers free weekly credit reports through due to the pandemic.

2. Pay your bills on time. As you can see in the breakdown, your payment history makes up a significant portion of your credit score. Chronically late payments on loans, credit cards, and medical bills can bring down your score fast. Don’t view 0% interest rates on balances and minimum payment options as licenses to fall behind on payments. Accumulating more debt each month instead of working to pay it off will negatively affect your score.

3. Don’t close accounts. Hold on to your oldest credit cards and bank accounts if you can because they’ll help you maintain your length of credit history and your credit mix. You may need to use those accounts occasionally to keep them active, but it’ll be worth it. The longer your credit history, the better. However, for accounts that aren’t used often, consider storing the information in a secure place and freezing purchases when not in use to avoid theft.

4. Be financially proactive. As your debt situation changes and interest rates rise and fall, it’s vital to re-evaluate your debt. You might be able to call your credit card companies and negotiate for lower rates or apply for a lower interest rate card. Perhaps you could refinance your vehicle to improve your ability to pay. Or maybe you can consolidate your debt with a personal loan from CPS IBEW Federal Credit Union for one low-interest-rate payment to make each month.

Your credit score can label you, for better or worse. The good news is that there are steps you can take to turn around your score if it’s less than ideal. Take those steps this coming year to make your credit score work for you, not against you.

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