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As we discussed in UNIT 5, the information contained in your credit report can be used to evaluate your credit worthiness whenever you apply for financing, a job, an apartment, and even for an insurance policy. In an effort to fairly evaluate all credit applicants, most creditors use a mathematical scoring formula that translates your specific credit profile into a three-digit credit score; the higher the score, the less risk you represent.

It's important to realize that if your credit score is poor, it won't necessarily remain that way forever. Your current score is simply a snapshot of your credit profile at any given point in time. As long as they are accurate, negative credit notations that appear on your reports will only remain for seven years, and then they must be removed. Bankruptcy notations are treated differently. They stay on your report for ten years. In the meantime, it's your responsibility to make sure that every new addition to your report shows evidence of better payment patterns.

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Credit reports and scores are very time-sensitive items. Your score from three months ago is probably not the same score a lender would get from the credit reporting agencies today. If you do have negative notations on your report, even before the seven years have passed, if you've re-dedicated yourself to meeting your obligations on time, your credit score should begin to reflect these efforts. If you can be patient and make the necessary adjustments, it is possible to improve your credit score and your overall credit profile. The bottom line is, it's up to you to improve your credit performance from this day forward.