Understanding and Improving Your Credit Score
A breakdown of what makes up your credit score and how you can take control of it.
Payment History (35%)
This is the most significant factor. Lenders want to see a consistent record of on-time payments. A single late payment can have a noticeable negative impact. The best strategy is simple: always pay your bills on time.
Amounts Owed / Credit Utilization (30%)
This compares your credit card balances to your credit limits. It's recommended to keep your utilization below 30% on each card and across all cards. Paying down balances is a powerful way to boost your score quickly.
Length of Credit History (15%)
A longer credit history generally leads to a higher score. This is why it's often advised not to close your oldest credit card, even if you don't use it much. Time is on your side here.
Credit Mix (10%)
Lenders like to see that you can responsibly manage different types of credit, such as credit cards (revolving credit) and installment loans (like a car loan or mortgage). A healthy mix can improve your score.
New Credit (10%)
This factor looks at how many new accounts you've recently opened and how many hard inquiries are on your report. Opening too many new accounts in a short period can be a red flag, suggesting you might be in financial trouble.
How to Improve Your Score
Focus on the biggest factors: Pay every bill on time, every time. Keep your credit card balances low (or pay them off in full each month). Avoid opening unnecessary new accounts. And finally, check your credit report for free annually to dispute any errors.