Knowing your credit score is super important especially if you are planing on making a purchase on a car or home, or applying for a new loan or credit card. It’s always good to be prepared and know your score that way you can spend some time improving it if you need to.

Five factors that contribute to your credit score:

1. Payment History

Are you paying your bills on time? This accounts for about 35% of your score. Even if you cannot afford to pay off all your bills each month, you should at least be making the minimum payments on time.

2. Total Amount Owed

According to, you should strive to keep your score healthy by using less than 30% of available credit across all of your credit cards. I only use about 15%-20% just incase I have to charge something I didn’t plan on. Tip: If you notice you are going over the 30% and you aren’t in a position to use less, call your credit card company and ask if they can raise your credit for you. This will give you a larger available credit amount and lower your usage amount, granted that you don’t spend any more than your usual. This factor accounts for 30% of your score.

3. Length of Credit History

This factor accounts for 15% of your score.  Getting an early start on building credit is essential. Lucky for me, my father is a Banker and although it was a minor annoyance to go to the bank on my 18th birthday, I’m glad he taught me the important of building credit early. If you’re in your twenties and haven’t had a credit card yet, now is a great time to start. You may only get a credit of $500, but after doing well with that amount for a few months they are likely to increase that amount for you.

4. New Credit

Number of recently opened accounts and credit inquires. It’s good to have a couple of open accounts, but research shows that opening several credit accounts in a short period of time represents a greater risk – especially for people who don’t have a long credit history. This accounts for 10% of your score.

5. Types of Credit Used

Things such as a car loan, mortgage, and credit cards. It’s not necessary to have one of each, and it’s not a good idea to open credit accounts you don’t intend to use. The credit mix usually won’t be a key factor in determining your FICO Scores—but it will be more important if your credit report does not have a lot of other information on which to base a score. This accounts for 10% of your score.

3 Ways to Improve Your Credit Score:

1. Check Your Credit Report

Make sure you check your credit report annually. Review your credit report for errors and make sure that the amounts you owe are correct and that there are no late payments incorrectly listed.  If there are any errors on your credit report, dispute them with the credit bureau and reporting agency.

2. Set Up Payment Reminders

Paying your credit payments (credit cards, car loan, student loans) on time is one of the biggest contributing factors to your credit score.  Enroll in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account. Also, schedule reminders on your calendar to make sure you always pay your credit payments on time.

3. Reduce the Amount of Debt You Owe

Since your credit score is also based on your debt ratio (i.e. how much balance you have vs. your total credit limit), reducing the amount you owe can help increase your credit score. So if you have a balance on your credit cards, the first thing to do is stop using them. Then make a list of all your credit card accounts to determine how much you owe on each account and what interest rate each one is charging you. Come up with a payment plan that allows you to make additional debt payments starting with the highest interest rate first, while at the same time maintaining minimum payments on your other accounts.


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